Revision: Oct. 30, 2023, 10:27 a.m.
2024 SESSION
24-2675.0
10/05
HOUSE BILL [bill number]
SPONSORS: [sponsors]
COMMITTEE: [committee]
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ANALYSIS
This bill creates the New Hampshire legal tender act; establishes gold and silver as legal tender; establishes a state depository; and enables digital use of gold and silver.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
24-2675.0
10/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Chapter; New Hampshire Legal Tender Act. Amend RSA by inserting after chapter 5-C the following new chapter:
CHAPTER 5-D
New Hampshire Legal Tender Act
5-D:1 Definitions. In this chapter:
I. "Legal tender" means a medium of exchange that is authorized by the United States Congress or by any state pursuant to Article I Section 8 or Section 10, respectively, of the United States Constitution, for the payment of debts, public charges, taxes or dues.
II. “Precious metal” means gold, silver, platinum, palladium, or rhodium.
III. "Bullion" means refined precious metal in any shape or form, including coins, rounds, bars, ingots, and any other products, that is:
(a) Stamped or imprinted with the weight and purity of the precious metal that it contains; and
(b) Valued primarily based on its metal content and not its form and function.
IV. "Specie" means: gold or silver bullion fabricated into products of uniform shape, size, design, content, and purity, suitable for or customarily used as currency, as a medium of exchange, or as the medium for purchase, sale, storage, transfer, or delivery of precious metals in retail or wholesale transactions.
V. “Specie legal tender instrument” means a negotiable written unconditional promise specifying a particular gold or silver weight of specie legal tender payable by the issuer to the bearer on demand in exchange for surrender of the writing, whether physical or electronic.
VI. "Depository" refers to the New Hampshire state bullion depository established under this chapter.
VII. "Administrator" means the individual or entity appointed by the New Hampshire state treasury to oversee the operation and management of the depository.
VIII. "Depository account" means an account established with the depository to facilitate the storage, transfer, and exchange of bullion.
IX. "Digital currency" means the digital gold currency established under this chapter.
X. “Qualified business unit” means any unit of trade or business of a taxpayer which maintains separate books and records in a particular functional currency.
XI. "Open blockchain token" means a digital asset that is:
(a) Created upon the confirmation or aggregation of specific transactions on a digital ledger or database; or
(b) Created by deploying computer code to a blockchain network, facilitating the creation of digital tokens or other units; or
(c) Through a combination of the methods described in subparagraphs (a) or (b);
(d) Recorded in a digital ledger or database that is chronological, consensus-driven, decentralized, and cryptographically secured, particularly concerning the token's supply and distribution;
(e) Able to be exchanged or transferred between individuals without the need for a central intermediary; and
(f) Developed and maintained with a codebase consisting entirely of open-source software, ensuring transparency and collaborative improvement.
XII. "Open source software" means software that ensures the user:
(a) The right to use the software for any purpose, without limitations;
(b) Unhindered access to its source code, promoting transparency and understanding, except for cryptographic private keys required to cryptographically sign and verify transactions on a blockchain or distributed ledger;
(c) The ability to thoroughly inspect and review the software's inner workings, excluding values related to the aforementioned cryptographic keys;
(d) The right to leverage, adapt, or modify specific components or functionalities based on individual requirements;
(e) The right to replicate and share the software with others, excluding any distribution of cryptographic keys essential for signing and verification on blockchains or distributed ledgers; and
(f) The privilege to enhance or modify the software and disseminate those changes, ensuring that derivative works remain under a license consistent with the original software's licensing terms.
5-D:2 Specie Legal Tender.
I. Specie legal tender shall consist of:
(a) Specie coin issued by the United States government at any time; and
(b) Any other specie that the state treasurer designates as legal tender pursuant to the monetary authority reserved to the several states in Article One Section 10 of the United States Constitution.
II. Legal tender specie shall not be characterized as personal property for taxation or regulatory purposes.
III. The exchange of one type or form of legal tender for another type or form of legal tender shall not give rise to any tax liability.
IV. The purchase, sale, or exchange of any type or form of legal tender specie shall not give rise to any tax liability.
V. Unless specifically provided by law or by contract, a person shall not compel another person to tender specie or to accept specie as legal tender.
VI. The attorney general's office shall enforce this section without prejudice to a private right of action.
VII. If a valid and enforceable contract expressly designates a type or form of specie as tender, then a New Hampshire court asked to adjudicate the breach of such a contract shall require, as a remedy for the breach, the specific performance of tendering the type or form of specie specified in the contract.
VIII. Legal tender specie may be recognized to pay private debts, taxes, and fees levied by the state of New Hampshire or any local subdivisions thereof.
IX. Any taxpayer may maintain one or more qualified business units having a single functional currency for each such unit, and may elect to either pay the tax liability of such qualified business unit in such functional currency, if authorized by the treasurer, or in U.S. dollars determined:
(a) By computing the taxable income or loss separately for each such unit in its functional currency.
(b) By translating the income or loss separately computed under subparagraph (a) at the appropriate exchange rate, and
(c) By making proper adjustments as prescribed by the treasurer for transfers of property between qualified business units of the taxpayer having different functional currencies.
5-D:3 Depository; Establishment and Administration.
I. The New Hampshire state treasury shall establish and administer the New Hampshire state bullion depository to provide a secure location for the storage of bullion.
(a) The state treasury may contract with a third party to act as the administrator of the depository.
(b) The administrator shall manage the day-to-day operations of the depository and implement security, storage, transactional, and administrative procedures in accordance with this chapter and any rules adopted under it. “Security” includes both physical, online, and logical security standards that meet generally accepted standards within the information assurance industry.
5-D:4 Depository Accounts; Establishment.
I. A person, including a governmental entity, may establish a depository account by entering into a depository agreement with the depository.
II. The administrator shall maintain a record of all depository accounts, and all transactions, deposits, and withdrawals associated with each account. Such records shall be provided upon written request within 5 business days. All records should be kept, at a minimum, on approved state of New Hampshire computer systems and records of depository accounts should be maintained by the state for a period of not less than 7 years and one day. The administrator shall ensure that account information remains confidential and is protected from unauthorized access.
III. A depository account holder may deposit, withdraw, sell, or
purchase bullion through their account in accordance with this chapter and any rules adopted under it. The depository shall develop processes and systems to facilitate timely bullion purchase, sale, deposits, and withdrawals which may include:
(a) Physical deposit and withdrawals to and from the depository’s physical location, or, to a partner organization such as a major mint or refiner capable of providing bullion that meets standards set by the state treasurer.
(b) Electronic systems that meet current industry standards for the purchase and sale of bullion for account holders that cannot or choose not to travel to the physical location.
5-D:5 Security Measures and Insurance.
I. The administrator shall ensure the depository has state-of-the-art security measures to prevent theft, fraud, or other unauthorized access or removal of bullion.
II. The depository shall maintain insurance coverage sufficient to cover the full value of all bullion stored at the depository. Such insurance should be provided by an established provider known to meet industry and regulatory standards for reimbursement. Such insurer must maintain appropriate fund liquidity to cover liabilities considered usual and customary for such insurance.
III. Regular audits, occurring not less than bi-annually, shall be conducted by an independent third-party to verify the amount and value of bullion stored in the depository and to inspect the security measures and protocols in place. The third party should be an established provider with a good history of providing such service. Documentation of audit results must be made available to the public upon request within a reasonable time frame. Documentation should include, at a minimum, summary totals of metals amounts assessed, as well as documentation of any discrepancies found during the audit.
5-D:6 Transactions and Service Fees.
I. The administrator may establish fees for the storage, withdrawal, and transfer of bullion within the depository.
II. All fees shall be made public and available to depository account holders and the general public.
III. The state treasury shall periodically review these fees to ensure they are reasonable and in line with market rates.
5-D:7 State Use of the Depository.
I. State agencies, municipalities, and other governmental bodies in New Hampshire may use the depository for storing bullion.
II. The state treasury may deposit a portion of its funds into the depository in the form of bullion, with such bullion being considered as part of the state's official financial reserves.
III. The state treasury shall develop guidelines and adopt rules for the state's use of the depository.
5-D:8 Reporting and Oversight.
I. The administrator shall provide a quarterly report to the state treasury detailing the operations, transactions, and financial status of the depository.
II. The state treasury shall provide an annual report to the speaker of the house of representatives and the senate president regarding the status, operations, and financials of the depository.
5-D:9 Rulemaking. The state treasurer shall adopt rules under RSA 541-A as necessary for:
I. The establishment, operation, security, and administration of the depository.
II. Ensuring the security of the digital currency.
III. Preventing fraud.
5-D:10 Conflicts of Interest.
I. No employee or official associated with the oversight or operation of the depository shall have any financial interests in companies or entities that produce, sell, or manage bullion.
II. Any potential conflict of interest must be disclosed to the state treasury immediately upon discovery.
III. Violations of this section may result in removal from position, fines, or other legal penalties as determined by the attorney general.
5-D:11 Contractual Agreements.
I. The state treasurer has all authority necessary to enter into contracts to administer this chapter and fulfill the purposes of this chapter.
II. The administrator may enter into contractual agreements with private entities for services related to the storage, transportation, or security of bullion.
III. All contractual agreements shall be reviewed and approved by the state treasury to ensure they align with the state’s interests and security requirements.
5-D:12 Legal and Regulatory Compliance.
I. The depository shall operate in compliance with all federal and state laws pertaining to bullion storage, management, and transactions.
II. The administrator shall consult regularly with legal counsel to ensure that the depository remains compliant with evolving legal and regulatory landscapes.
5-D:13 Termination or Transfer of the Depository.
I. The depository may only be terminated or transferred to a private entity by an act adopted by the New Hampshire legislature.
II. Any termination or transfer must ensure the security of the bullion, the rights of account holders, and the financial interests of the state.
5-D:14 Establishment and Administration of Digital Gold Currency.
I. The state treasurer shall establish a digital currency that is backed by gold so that each unit of the digital currency issued represents a particular fraction of a troy ounce of gold held in a bailee relationship as provided by this chapter.
II. The digital currency established under this chapter shall utilize an open blockchain token to ensure transparency, security, and auditability of the currency.
III. The state treasurer may contract with a private vendor to establish the digital currency or perform other duties under this chapter.
IV. In establishing the digital currency, the state treasurer shall establish a means to ensure that a person who holds the digital currency may readily transfer or assign the digital currency to any other person by electronic means.
5-D:15 Gold Held in a Bailee Relationship.
I. The state treasurer shall hold in a bailee relationship on behalf of the digital currency holders all gold purchased to back the digital currency. The state treasurer shall maintain enough gold to provide for the redemption in gold of all units of the digital currency that have been issued and are not yet redeemed for money or gold.
II. The state treasurer may establish an account in a designated bullion depository to hold gold purchased to back the digital currency and may hold the gold otherwise as convenient for the administration of this chapter.
5-D:16 Purchase and Deposit; Issuance.
I. A person may:
(a) Purchase from this state through the state treasurer any number of units of the digital currency; or
(b) Deposit gold with the state treasurer or a depository designated by the state treasurer, in any form accepted by the state treasurer, in exchange for units of the digital currency.
II. On receiving payment for a purchase of the digital currency together with any fee charged under RSA 5-D:6, the state treasurer shall:
(a) Using the money received from the purchaser, buy a fractional number of troy ounces of gold equal to the number of units of the digital currency issued to the purchaser under subparagraph (b); and
(b) Issue to the purchaser a number of units of the digital currency equal to the amount of gold that the state treasurer purchases with the money received from the purchaser.
III. On receiving a gold deposit together with any fee charged, the state treasurer shall issue to the depositor a number of units of the digital currency equal to the amount of gold deposited.
5-D:17 Redemption of Currency For Money.
I. A person who holds the digital currency may present to the state treasurer any number of units of the digital currency to redeem for money.
II. On receipt of a person's request for redemption, the state treasurer shall:
(a) Sell from the gold held in the bailee relationship a fractional number of troy ounces equal to the number of units of the digital currency being redeemed; and
(b) Provide to the person an amount of money equal to the amount received from the sale of gold under subparagraph (a), less a fee charged under RSA 5-D:6.
5-D:18 Redemption of Currency For Gold.
I. A person who holds the digital currency may present to the state treasurer any number of units of the digital currency to redeem for an equal fractional number of troy ounces of gold from the bailee relationship.
II. On receipt of a request for redemption, the state treasurer shall:
(a) Withdraw the requested number of troy ounces of gold from the gold held in the bailee relationship; and
(b) On the payment of a fee deliver the gold to the requestor.
III. The state treasurer may manage redemption of the digital currency for gold by the use of bullion of standard sizes and may pay fractional remainders in cash as is necessary to facilitate the transaction.
5-D:19 Value of Digital Currency.
I. At the time of each transaction involving the issuance or redemption of the digital currency, the state treasurer shall determine the value of a unit of the digital currency.
II. The value of a unit of the digital currency at the time of a transaction must be equal to the value of the appropriate fraction of a troy ounce of gold at the time of that transaction.
5-D:20 Certain Money and Deposits Held in Bailee Relationship and Not Subject to Legislative Appropriation.
I. Money received from the purchase of the digital currency, gold purchased and held under this chapter, and money received from the sale of gold in response to a request for redemption, is:
(a) Held in a bailee relationship by the state treasurer on behalf of persons who hold the digital currency; and
(b) Not available for legislative appropriation.
5-D:21 Fees and Exchange Rates.
I. The state treasurer may establish a fee for the issuance or redemption of the digital currency at any rate necessary to cover the costs of administering this chapter. The state treasurer shall deposit the fee proceeds to the credit of an account established in the general fund that may be used to pay the costs.
II. The state treasurer shall establish and publish online exchange rates for any specie or bullion products that are accepted in the depository. These will be determined based on manufacturing premium and wholesale pricing.