Florida Governor Signs Legislation Easing Cryptocurrency Regulation – Fin Tech

On May 12, 2022, Florida Governor Ron DeSantis signed new
legislation,CS/HB 273, defining and deregulating
cryptocurrency in the state. The legislation amends Florida’s
financial regulations targeting money service businesses (MSBs),
creates a new definition for “virtual currency,” and
ultimately eases restrictions on Florida’s crypto industry. The
bill will become effective on January 1, 2023. Winston & Strawn
LLP is actively following these developments, given the potential
ramifications for our clients.


Generally, CS/HB 273 makes several amendments that define and
deregulate cryptocurrency in Florida. The bill does so by easing
MSB requirements for cryptocurrency users and clarifying
definitions specific to cryptocurrency.

A. Defining Virtual Currency

CS/HB 273 takes the important step of defining “virtual
currency” under Chapter 560 of the Florida Statues (Ch. 560).
Virtual currency is defined as “a medium of exchange in
electronic or digital format that is not currency.” However,
the definition explicitly excludes virtual currency that is
“issued by or on behalf of a publisher and used solely within
an online game, game platform, or family of games sold by the same
publisher or offered on the same game platform” or
“[u]sed exclusively as part of a consumer affinity or rewards
program and can be applied solely as payment for purchases with the
issuer or other designated merchants but cannot be converted into
or redeemed for currency or another medium of exchange.”

This definition is fairly expansive and includes popular forms
of cryptocurrency, such as Bitcoin, Ether, and Tether. However, it
makes important exclusions for specific uses. For example,
cryptocurrency rewards and incentives used in popular games, such
as Axie Infinity and Decentraland, likely would be excluded.
Additionally, popular rewards programs, such as credit card points,
would seemingly be excluded as well. As discussed further below,
these exclusions are important, as they limit the MSB compliance
requirements for the parties offering these game rewards and
rewards programs.

B.Easing MSB Requirements for Individuals

CS/HB 273 eases MSB licensing requirements to exclude virtual
currency transactions if an intermediary is not involved.

Under Ch. 560, money transmitters are subject to extensive and
restrictive licensing requirements as a type of MSB. Specifically,
MSBs must file for a license, have a net worth of at least
$100,000, have corporate surety bonds, possess permissible
investments, and be subject to extensive record-keeping and
anti-money laundering laws.

With the passage of CS/HB 273, a money transmitter license is only
required for a person acting as an intermediary “to transmit
… virtual currency from one person to another location or
person,” and only if the intermediary “has the ability to
unilaterally execute or indefinitely prevent a transaction.”
If persons in a transaction fall outside this definition, they are
not required to be licensed. This change clarifies and deregulates
cryptocurrency transactions under Ch. 560. Prior to the passage of
CS/HB 273, cryptocurrency was not expressly included in Ch. 560.
This led to confusion about how cryptocurrency transactions would
be treated and whether individuals trading cryptocurrency would be
violating Florida’s financial regulations.

In that regard, CS/HB 273 addresses the industry backlash from a
2019 Florida Third District Court of Appeal opinion finding that a
defendant engaged in two-party cryptocurrency transactions was
required to be licensed as an MSB (State v. Espinoza, 264
So. 3d 1055, 1059-60 (Fla. 3d DCA 2019)). This opinion was
inconsistent with the Florida Office of Financial Regulation’s
prior view on that point, expressed by the regulatory agency in a
Petition for Declaratory Statement that was known throughout the
cryptocurrency community in Florida. With CS/HB 273, these
two-party, individual transactions are no longer subject to MSB
licensing. This greatly deregulates many private transactions that
occur in Florida.

C. Easing Restrictions on Platforms and

Although individuals may be excluded from financial regulations,
prominent cryptocurrency platforms, such as Coinbase or Voyager,
will still require MSB licenses.

CS/HB 273 provides additional easing measures for these
platforms. First, the statute amends the definition of
“monetary value” to narrow the regulations for virtual
currency to only MSB regulations for money transmitters, but not
other licenses under Ch. 560. Similarly, the definition of
“payment instrument” is amended to include instruments
used for the transmission, exchange or payment of currency or
monetary value, but the instrument is not the currency or monetary
value itself. This would exclude most virtual currencies from its

In addition, CS/HB 273 also allows licensees under Florida’s
permissible-investments statutes to hold virtual currency in trust.
Previously, money transmitters that transmit virtual currency would
need to also hold the equivalent value in cash or other enumerated
assets. Now, the money transmitter must only hold virtual currency
of the same type and amount owed or obligated to the person or
location receiving the transmissions.

CS/HB 273 does impose several requirements on virtual currency
transmitters. For example, virtual currency transmitters under Ch.
560 must now ensure that the virtual currency is available to the
designated recipient within 10 business days after receipt and
confirm receipt. These transmitters must also keep additional
records, including daily records of virtual currency transmitted.
To note, these requirements were previously in place, but now
explicitly include virtual currency transmitters in their


CS/HB 273 is set to have wide-ranging impacts when it becomes
effective on January 1, 2023. As several experts have stated, the
statute reconfirms Florida’s position as a crypto-friendly hub.
This may lead to increased virtual currency transactions,
activities, and investments in the state.

In its analysis of the bill, the Florida House of
Representatives took a more measured approach. The House noted that
the “bill’s overall impact on the private sector, while
likely positive, is still indeterminate.” Although the bill
provides further clarity, it seems unclear whether more businesses
will now forgo MSB licenses or whether applications will

CS/HB 273 is indicative of larger national trends and divides
addressing cryptocurrency. Despite Florida’s comparatively
lenient policies, virtual currency businesses are still potentially
subject to federal regulations and the regulations of other states
in which they do business or service customers. These regulations
may continue to expand, given recent actions by the federal
government, including the issuance ofPresident Biden’s Executive Orderand
increased scrutiny over virtual currency given the ongoing
Ukraine-Russian conflict.

Ultimately, CS/HB 273 provides further clarity and deregulation
for the crypto industry in Florida. Winston & Strawn is closely
monitoring these developments.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.