Bill Text: NY A02318 | 2023-2024 | General Assembly | Introduced
Bill Title: Requires certain disclosures in advertisements involving virtual tokens.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-01-03 - referred to science and technology [A02318 Detail]
Download: New_York-2023-A02318-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 2318 2023-2024 Regular Sessions IN ASSEMBLY January 25, 2023 ___________ Introduced by M. of A. VANEL -- read once and referred to the Committee on Science and Technology AN ACT to amend the general business law, in relation to requiring certain disclosures in advertisements involving virtual tokens The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The general business law is amended by adding a new section 2 350-b-2 to read as follows: 3 § 350-b-2. Disclosures required in advertisements involving security 4 tokens. 1. As used in this section the following terms shall have the 5 following meanings: 6 (a) "virtual tokens" shall mean security tokens and stablecoins. 7 (b) "security tokens" shall mean any form of fungible and non-fungible 8 computer code by which all such forms of ownership of said computer code 9 is determined through verification of transactions or any derivative 10 method, and that is stored on a peer-to-peer computer network or any 11 other such computerized system or through any derivative means of stor- 12 age, and which conforms to one of the following: 13 (i) such class of virtual tokens are advertised by the developer or 14 another at the developer's direction to be bought and sold for the 15 purpose of profit, whether or not such purpose is advertised as the sole 16 purpose; 17 (ii) such class of virtual tokens can be reasonably understood by 18 members of the public to be bought and sold for the purpose of profit; 19 (iii) the value of such class of virtual tokens is determined by the 20 supply and demand of the virtual token; and 21 (iv) such class of virtual tokens: (i) are not pegged to an external 22 source, whether or not such external source is volatile, (ii) are pegged 23 to another class of virtual token; or (iii) such class of virtual 24 tokens do not employ technology which prevents large fluctuations in its 25 price or such technology fails to prevent the same. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD06263-01-3A. 2318 2 1 (c) "stablecoin" shall mean any form of fungible and non-fungible 2 computer code by which all such forms of ownership of said computer code 3 is determined through verification of transactions or any derivative 4 method, and that is stored on a peer-to-peer computer network or any 5 other such computerized system or through any derivative means of stor- 6 age, and which conforms to all of the following: 7 (i) such class of virtual tokens are not advertised by the developer 8 or another at the developer's direction to be bought and sold for the 9 purpose of profit, whether or not such purpose is advertised as the sole 10 purpose; 11 (ii) such class of virtual tokens cannot be reasonably understood by 12 members of the public to be bought and sold for the purpose of profit; 13 and 14 (iii) the value of such class of virtual tokens is not determined by 15 the supply and demand of the class of virtual token; and 16 (iv) such class of virtual tokens are pegged to an external source, 17 other than another class of virtual tokens, whether or not such external 18 source is volatile, or such class of virtual tokens do employ technology 19 which prevents large fluctuations in its price and such technology 20 succeeds in preventing the same. 21 (d) "class" shall mean a group of fungible or non-fungible tokens, 22 irrespective of the amount created, that is intended by the developer to 23 be: 24 (i) in the case of fungible tokens, valued and exchanged together; or 25 (ii) in the case of non-fungible tokens, regarded as part of the same 26 group of digital or physical items or valued together with the develop- 27 er's other non-fungible tokens based on the fact that the non-fungible 28 tokens were created by a certain developer, taking into account the 29 developer's notoriety, sale volume, and how he or she is regarded within 30 virtual token communities. 31 (e) "developer" shall mean the person or persons, whether natural or 32 otherwise, and any agent or employee thereof who either create in whole 33 or in part, maintain in whole or in part, or own more than ten percent 34 of a class of virtual tokens utilizing any technical standard and who 35 offers them for purchase in the state of New York or, where the sale of 36 their tokens in the state of New York is prohibited, such person does 37 not use reasonable efforts to prevent such virtual tokens from being 38 made available for purchase in the state of New York. 39 (f) "technical standard" shall mean the rules that a class of virtual 40 tokens shall comply with in order to use the blockchain network or any 41 derivative means thereof. 42 (g) "non-fungible token" shall mean a virtual token used to denote on 43 the blockchain ownership of any digital or physical item or any deriva- 44 tive means thereof. 45 (h) "fungible token" shall mean any virtual token stored on the block- 46 chain other than non-fungible tokens. 47 (i) "owned" and "ownership" shall mean the means by which ownership of 48 a digital asset is noted on the blockchain or any derivative means ther- 49 eof. 50 (j) "token" shall mean the technical standard used to create a fungi- 51 ble or non-fungible piece of computer code. 52 (k) "wallet" shall mean a device, program, or service which stores the 53 public and/or private keys for virtual token transactions. 54 (l) "blockchain" shall mean any type of technology which stores code 55 on a database of which said database represents the record of trans- 56 actions that make up virtual tokens or any derivative technology.A. 2318 3 1 (m) "private key" shall mean the unique identifier of a wallet, or any 2 substantially similar analogue, that is paired with a publicly available 3 identifier and associated with an algorithm that is necessary to carry 4 out an encryption or decryption required to execute a transaction. 5 (n) "advertisement" shall mean and include but not be limited to any 6 public notice, circular, advertisement, newspaper, article, letter, 7 investment service, or communication to more than one person whether 8 directly or indirectly. 9 2. It shall be unlawful for any person, whether natural or otherwise, 10 or any agent or employee thereof to give publicity to or circulate any 11 advertisement, which, though not purporting to offer a class of security 12 tokens for sale, describes such class of security tokens that are 13 created by a developer seeking such advertisement for consideration, 14 whether directly or indirectly, without fully disclosing the receipt, 15 whether past or prospective, of the amount thereof, and whether such 16 consideration is made directly or indirectly and in the past or prospec- 17 tively, a description in accordance with subdivision four of this 18 section for: 19 (a) the same class of security tokens; 20 (b) a different class of security tokens created by the same develop- 21 er; 22 (c) the same or a different class of security tokens created by the 23 same developer and other consideration, whether a class of security 24 tokens or otherwise; 25 (d) a different class of security tokens that is intended to increase 26 in price in conjunction with the advertisement of the class of security 27 tokens advertised, whether or not such class of security tokens was 28 created by the same developer; 29 (e) a pre-public offering to purchase any of the security tokens 30 described in paragraphs (a) through (d) of this subdivision whether or 31 not such security tokens are actually purchased; 32 (f) a post-public offering to purchase any of the security tokens 33 described in paragraphs (a) through (d) of this subdivision for a 34 reduced price, whether or not such security tokens are actually 35 purchased; or 36 (g) a post-public notification of the existence of any of the security 37 tokens described in paragraphs (a) through (d) of this subdivision that 38 is intended to be prior to an anticipated influx of purchasers that will 39 raise the price of the security tokens, whether or not such security 40 tokens are actually purchased. 41 3. The advertiser shall have an affirmative duty to use reasonable 42 efforts to determine whether the class of security tokens paid to him or 43 her were created by the same developer and whether such security tokens 44 were intended to increase in price in conjunction with the advertisement 45 of the security token advertised. 46 4. The form of disclosure shall: 47 (a) be written on each advertisement in a sufficiently readable type- 48 face or, where such advertisement is auditory in nature, stated in a 49 clear and understandable tone prior to the auditory statement; 50 (b) in the case of the same security token advertised being paid in 51 consideration, a statement stating the exact amount of tokens provided, 52 the date that they were provided, and the type of token provided; 53 (c) in the case of a different security token created by the same 54 developer, a statement stating the exact amount of tokens provided, the 55 date that they were provided, the type of token provided, and a state-A. 2318 4 1 ment that the security token provided was created by the same developer 2 as the security token being advertised; 3 (d) in the case of the same or a different class of security tokens 4 and other consideration, whether security tokens or otherwise, a state- 5 ment stating the exact amount of tokens provided, the date that they 6 were provided, the type of token provided, if the security token is 7 different from the advertisement, a statement that the security token 8 provided was created by the same developer as the security token being 9 advertised, and a description of the other consideration provided howev- 10 er that if such other consideration conforms to any of the provisions of 11 subdivision two of this section, then a statement conforming with its 12 respective provision in this section; 13 (e) in the case of a different class of security tokens that is 14 intended to increase in price in conjunction with the advertisement of 15 the class of security tokens advertised, a statement stating the exact 16 amount of tokens provided, the date that they were provided, the type of 17 token provided, and a statement stating the security token that is 18 intended to increase in conjunction with the advertisement and that such 19 security token is intended by the developer to increase with the adver- 20 tisement of the security token being advertised; 21 (f) in the case of a pre-public offering to purchase any of the secu- 22 rity tokens described in paragraphs (a) through (d) of subdivision two 23 of this section, if an exact amount of security tokens are offered, a 24 statement stating the exact amount of security tokens offered, if an 25 unlimited amount of security tokens are offered, a statement stating 26 that the developer has offered the advertiser to purchase an unlimited 27 amount of tokens, and in either case, the date that the offering was 28 made, the date which the advertiser may purchase the security tokens at 29 the pre-public price and the type of token provided. The advertiser 30 shall be prohibited from disclosing or making public whether he or she 31 actually purchased the security token stated; 32 (g) in the case of a post-public offering to purchase any of the secu- 33 rity tokens described in paragraphs (a) through (d) of subdivision two 34 of this section for a reduced price, if an exact amount of security 35 tokens are offered, a statement stating the exact amount of security 36 tokens offered, if an unlimited amount of security tokens are offered, a 37 statement stating that the developer has offered the advertiser to 38 purchase a limitless amount of tokens, and in either case, the date that 39 the offering was made, the date which the advertiser may purchase the 40 security tokens at the reduced price and the type of token provided. The 41 advertiser shall be prohibited from disclosing or making public whether 42 he or she actually purchased the security token stated; 43 (h) in the case of a post-public notification of the existence of any 44 of the security tokens described in paragraphs (a) through (d) of subdi- 45 vision two of this section that is intended to be prior to an antic- 46 ipated influx of purchasers that will raise the price of the security 47 token, a statement stating the date that the advertiser was notified of 48 the existence of the security token, the approximate price of the secu- 49 rity token at the time of the notification, whether the advertiser actu- 50 ally purchased the security token, and, if the advertiser did in fact 51 purchase the security token, the amount that the advertiser purchased of 52 the security token and the amount purchased; 53 (i) in the case where such consideration is prospective and includes 54 any of the items required to be disclosed pursuant to subdivision two of 55 this section, a statement describing the method by which such consider- 56 ation will be paid prospectively, the type of account or other person orA. 2318 5 1 entity in which such consideration is stored, if any, that it is being 2 held in, the date that such consideration will be released and the 3 person or entity that such consideration will be released to, and a 4 statement satisfying the provision that such consideration conforms to; 5 and 6 (j) in the case of a combination of any of the foregoing provisions of 7 this subdivision, a statement satisfying each provision. 8 § 2. This act shall take effect on the thirtieth day after it shall 9 have become a law. Effective immediately, the addition, amendment 10 and/or repeal of any rule or regulation necessary for the implementation 11 of this act on its effective date are authorized to be made and 12 completed on or before such effective date.
