SecondHB1426_S_FIN.001 RegularSENATE SessionCOMMITTEE Seventy-first General Assembly STATE OF COLORADOREFERENCE REENGROSSEDREPORT This_______________________________ VersionMay Includes4, All2018 AmendmentsChairman Adoptedof inCommittee theDate HouseCommittee ofon IntroductionFinance. LLS NO.

18-1241.01After Yelanaconsideration Loveon x2295the HOUSEmerits, BILLthe 18-1426Committee HOUSErecommends SPONSORSHIPthe Pabon,following: SENATE SPONSORSHIP Neville, T., House Committees Senate Committees State, Veterans, & Military Affairs A BILL FOR AN ACT C ONCERNING THE EXEMPTION OF VIRTUAL CURRENCY FROM REGULATION UNDER THE "M ONEY T RANSMITTERS A CT ".

BillHB18-1426 Summarybe (Note:amended as follows, and as so amended, be referred to the Committee of the Whole with favorable recommendation:

ThisAmendreengrossedbill,page3,strikelines11through14andsubstitute: summary applies to this bill as introduced and does notreflectanyamendmentsthatmaybesubsequentlyadopted.Ifthisbill e n passes third reading in the house of introduction, a bill summary that m 8 applies to the reengrossed version of this bill will be available at E n 0 U U , http://leg.colorado.gov.) O i y H a a The bill exempts the transmission of virtual currency from R M r regulation under the Colorado "Money Transmitters Act".

3"(b) i"Security" Bedoes itnot enactedinclude: by the General Assembly of the State of Colorado:

a(I) 1Anyinsurance Eor eendowment 2policyor Uannuitycontract dunder 2which Oan 2insurance ycompanypromisesto Shadingpaya denotessum HOUSEof amendment.moneyeither in a lump sum or periodically for life or some other specified period;

Double(II) underliningAN denotesOPEN SENATEBLOCKCHAIN amendment.TOKEN THAT :

(A) H dAS MNOT CapitalBEEN lettersMARKETED orBY boldTHE &DEVELOPER italicOR numbersSELLER indicateAS newAN materialINVESTMENT to; be added to existing statude.

Dashes(B) throughIS theEXCHANGEABLE wordsFOR indicateGOODS deletionsOR fromSERVICES existing;AND statute.(C) H ASNOTBEENENTEREDINTOAREPURCHASEAGREEMENT ,OR AN AGREEMENT TO LOCATE A BUYER ,BY THE DEVELOPER OR SELLER OF THE TOKEN .".

ePage A3, SECTIONstrike 1.lines 26 and 27.

LegislativePage declaration.4, strike lines 1 through 5.

The** general*** assembly** declares*** that** virtual*HB1426_S_FIN.001* currency is a new and emerging technology with global implications.

As a result, it is of great importance to the state of Colorado for such technology to be fully examined and defined prior to further regulation or exemption from regulation by the state.

SECTION 2.

In Colorado Revised Statutes, 11-51-201, amend the introductory portion and (17);

and add (11.8) as follows:

11-51-201.

Definitions.

As used in this article 51, unless the context otherwise requires:

(11.8) "OPEN BLOCKCHAIN TOKEN "MEANS A DIGITAL UNIT THAT IS:

(a) CREATED :

(I) IN RESPONSE TO THE VERIFICATION OR COLLECTION OF A SPECIFIEDNUMBEROFTRANSACTIONSRELATINGTOADIGITALLEDGEROR DATABASE ;

(II) YDEPLOYINGCOMPUTERCODETOABLOCKCHAINNETWORK OR DISTRIBUTED DIGITAL LEDGER THAT ALLOWS FOR THE CREATION OF DIGITAL TOKENS OR OTHER UNITS;OR (III) USING ANY COMBINATION OF THE METHODS SPECIFIED IN SUBSECTIONS (11.8)(a)(AND (11.8)(a)(IOF THIS SECTIO;

(b) R ECORDED IN A DIGITAL LEDGER OR DATABASE THAT IS CONSENSUS -BASED,DECENTRALIZED ,ANDMATHEMATICALLYVERIFIEDIN NATURE ,ESPECIALLY RELATING TO THE SUPPLY OF DIGITAL UNITS AND THEIR DISTRIBUTION;AND (c) CAPABLE OF BEING TRADED OR TRANSFERRED BETWEEN PERSONS WITHOUT AN INTERMEDIARY OR CUSTODIAN OF VALUE .

(17) (a) "Security" means any note;

stock;

treasury stock;

bond;

-2- 1426 debenture;

evidence of indebtedness;

certificate of interest or participation in anyprofit-sharing agreement;

collateral-trust certificate;

preorganizationcertificateofsubscription;transferableshare;investment contract;viaticalsettlementinvestment;voting-trustcertificate;certificate of deposit for a security;

certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such atitleorlease;or,ingeneral,anyinterestorinstrumentcommonlyknown as a "security" or anycertificate of interest or participation in, temporary or interimcertificate for, guarantee of, or warrant or right to subscribe to or purchase any of the foregoing.

(b) "Security" does not include any insurance or endowment policy or annuity contract under which an insurance company promises to pay a sum of money either in a lump sum or periodically for life or some other specified period.

(c) Forpurposesof thisarticlSUSEDINSUBSECTION (17)(aOF THIS SECTION, an "investment contract":

(I) Need not involve more than one investor nor be limited to those circumstances wherein there are multiple investors who are joint participants in the same enterprise;

(II) NCLUDES AN INVESTMENT IN A COMMON ENTERPRISE WITH THE EXPECTATION OF PROFITS TO BE DERIVED PRIMARILY FROM THE EFFORTS OF A PERSON OTHER THAN THE INVESTOR .

"C OMMON ENTERPRISE "MEANS AN ENTERPRISE IN WHICH THE FORTUNES OF THE INVESTORAREINTERWOVENWITHTHOSEOFEITHERTHEPERSONOFFERING THE INVESTMENT ,A THIRD PARTY,OR OTHER INVESTORS.

(III) DOES NOT INCLUDE AN OPEN BLOCKCHAIN TOKEN THAT IS DEVELOPEDORSOLDFORACONSUMPTIVEPURPOSEWHERETHEBUYERAT -3- 1426 OR NEAR THE TIME OF SALE HAS NO EXPECTATION OF PROFIT .