MISSISSIPPI LEGISLATURE
2024 Regular Session
To: Banking and Financial Services; Ways and Means
By: Representatives Steverson, Jackson (11th)
AN ACT TO ESTABLISH THE "BLOCKCHAIN BASICS ACT" FOR THE PURPOSE OF REGULATING THE USE OF DIGITAL ASSETS AND CRYPTOCURRENCY IN THE STATE OF MISSISSIPPI; TO DEFINE TERMINOLOGY USED IN THE ACT; TO PROHIBIT ANY GOVERNMENT AGENCY OF THE STATE OF MISSISSIPPI ANY POLITICAL SUBDIVISION THEREOF FROM ACCEPTING OR REQUIRING A PAYMENT USING CENTRAL BANK DIGITAL CURRENCY AND FROM PARTICIPATING IN ANY TEST OF CENTRAL BANK DIGITAL CURRENCY BY ANY FEDERAL RESERVE BRANCH; TO PROVIDE THAT NO AGENCY OF THE STATE OF MISSISSIPPI NOR ANY POLITICAL SUBDIVISION THEREOF SHALL PROHIBIT, RESTRICT OR OTHERWISE IMPAIR AN INDIVIDUAL'S ABILITY TO USE DIGITAL ASSETS TO PURCHASE LEGAL GOODS OR SERVICES; TO PROVIDE THAT THE EXCHANGE OF DIGITAL ASSETS FOR LEGAL TENDER SHALL NOT BE CONSIDERED THE PURCHASE OF CURRENCY FOR TAX PURPOSES; TO PROVIDE THAT DIGITAL ASSETS USED AS A METHOD OF PAYMENT MAY NOT BE SUBJECT TO ANY ADDITIONAL TAX, WITHHOLDING OR ASSESSMENT; TO EXEMPT DIGITAL ASSETS USED AS A METHOD OF PAYMENT FROM BEING SUBJECT TO CAPITAL GAINS TAX, PROVIDED THAT EACH TRANSACTION DOES NOT EXCEED $200.00; TO PROVIDE FOR THE ANNUAL INFLATION ADJUSTMENT ON THE LIMITATION AMOUNT ON JANUARY 1 OF EACH YEAR, ACCORDING TO THE AVERAGE ANNUAL INCREASE IN THE CONSUMER PRICE INDEX; TO AUTHORIZE THE ESTABLISHMENT OF A DIGITAL ASSET MINING BUSINESS IN ANY AREA THAT IS ZONED FOR INDUSTRIAL USE; TO PROHIBIT POLITICAL SUBDIVISIONS OF THE STATE FROM IMPOSING ANY SPECIFIC LIMITATIONS DIGITAL ASSETS MINING THAT ARE MORE RESTRICTIVE THAN THOSE CURRENTLY IMPOSED FOR BUSINESS IN THE SAME ZONING AREA; TO PROHIBIT POLITICAL SUBDIVISIONS OF THE STATE FROM CHANGING THE ZONING OF A DIGITAL ASSET MINING BUSINESS WITHOUT GOING THROUGH THE PROPER NOTICE AND COMMENT; TO PROVIDE AN APPEALS PROCESS FOR A DIGITAL ASSET MINING BUSINESS TO CONTEST ZONING CHANGES; TO EXEMPT INDIVIDUALS ENGAGED IN HOME DIGITAL ASSET MINING, A DIGITAL ASSET MINING BUSINESS OR OPERATING A NODE OR A SERIES OF NODES ON A BLOCKCHAIN PROTOCOL FROM THE LICENSURE REQUIREMENTS OF THE "MISSISSIPPI MONEY TRANSMITTERS ACT"; TO PROVIDE THAT BUSINESSES OFFERING TO PROVIDE DIGITAL ASSET MINING OR STAKING AS A SERVICE FOR INDIVIDUALS OR TO OTHER BUSINESSES SHALL NOT BE CONSIDERED AS OFFERING A SECURITY OR INVESTMENT CONTRACT UNDER THE "MISSISSIPPI SECURITIES ACT OF 2010"; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. This act shall be known and may be cited as the "Blockchain Basics Act."
SECTION 2. As used in this act, the following terms shall have the meanings ascribed in the section, unless context of use clearly requires otherwise:
(a) "Blockchain" means data that is:
(i) Shared across a network to create a ledger of verified transactions or information among network participants linked together using cryptography to maintain the integrity of the ledger and to execute other functions; and
(ii) Distributed among network participants in an automated fashion to concurrently update network participants on the state of the ledger and any other function.
(b) "Blockchain protocol" means any executable software deployed to a blockchain composed of source code that is publicly available and accessible, including a smart contract or any network of smart contracts.
(c) "Central Bank Digital Currency" means a digital currency, a digital medium of exchange, or a digital monetary unit of account issued by the United States Federal Reserve System or a federal agency which is made directly available to a consumer by such entities, or which is processed or validated directly by such entities. The term does not mean a digital asset which is issued by a private entity which is backed by legal tender or government treasuries.
(d) "Consumer Price Index" means the Consumer Price Index for All Urban Consumers (CPI-U), 1982-1984 = 100, not seasonally adjusted, as defined and officially recorded by the United States Department of Labor, or its successor agency, from
January 1 of the current year compared to January 1 of the preceding year.
(e) "Digital asset" means virtual currency, cryptocurrencies, natively electronic assets, including stablecoins and non-fungible tokens (NFTs), and other digital-only assets that confer economic, proprietary, or access rights or powers.
(f) "Digital asset mining" means using electricity to power a computer or node for the purpose of securing a blockchain network.
(g) "Digital asset mining business" means a group of computers working that consume more than one megawatt of energy for the purpose of securing a blockchain protocol.
(h) "Governmental agency" means any board, commission, department or other agency of the state or any political subdivision thereof.
(i) "Hardware Wallet" means a physical device that is not continuously connected to the Internet and allows an individual to secure and transfer digital assets and under which the owner of the digital assets retains independent control over the digital assets.
(j) "Home digital asset mining" means using digital asset mining in an area zoned for residential use.
(k) "Node" means a computational device that communicates with other devices and/or participants on a blockchain to maintain consensus and integrity of that blockchain, creates and validates transaction blocks, and/or also contains and updates a copy of a blockchain, but does not exercise discretion over transactions initiated by the end user of the blockchain protocol.
(l) "Nonfungible token" or "(NFT)" is a unique digital identifier that is recorded on a blockchain and is used to certify ownership and authenticity.
(m) "Self-hosted wallet" means a digital interface used to secure and transfer digital assets; and under which the owner of the digital asset retains independent control over the digital assets that are secured by such digital interface.
(n) "Staking" means the act of committing digital assets for a period of time to validate and secure a specific blockchain network.
(o) "Staking as a service" means the provision of technical staking services, including the operation of nodes and the associated infrastructure, necessary to facilitate participation in blockchain networks' consensus mechanisms.
SECTION 3. (1) No governmental agency of the State of Mississippi nor any political subdivision thereof shall accept or require a payment using central bank digital currency.
(2) No governmental agency of the State of Mississippi nor any political subdivision thereof shall participate in any test of central bank digital currency by any Federal Reserve branch.
SECTION 4. (1) No governmental agency of the State of Mississippi nor any political subdivision thereof shall prohibit, restrict or otherwise impair the ability of an individual to:
(a) Use digital assets to purchase legal goods or services; or
(b) Self-custody digital assets using a self-hosted wallet or hardware wallet.
(2) The exchange of digital assets for legal tender shall not be considered the purchase of currency for tax purposes.
(3) Digital assets used as a method of payment may not be subject to any additional tax, withholding, assessment or charge by the state or a local government which is based solely on the use of the digital asset as the method of payment.
(4) Digital assets used as a method of payment shall not be subject to capital gains tax provided that each transaction does not exceed Two Hundred Dollars ($200.00). The limitation amount shall be adjusted annually for inflation on January 1 of each year, according to the average annual increase in the consumer price index. This subsection shall not be construed to prohibit the state, a local government or a political subdivision from imposing or collecting a tax, withholding, assessment or charge that would otherwise be offered if the transaction had taken place with United States legal tender.
SECTION 5. (1) It shall be legal in the State of Mississippi to:
(a) Participate in home digital asset mining as long as the person engaging in home digital asset mining complies with all local noise ordinances; and
(b) Have a digital asset mining business in any area that is zoned for industrial use, provided they comply with all current ordinances.
(2) No political subdivision of the state shall:
(a) Place any specific limit on sound decibels generated from home digital asset mining other than general limits set for sound pollution put forth by the political subdivision;
(b) Place any specific limit on sound decibels generated from a digital asset mining business other than limits set for sound pollution which apply to industrial zoned areas generally;
(c) Impose any other requirements on a digital asset mining business that is also not a requirement for data centers in its area of jurisdiction; or
(d) Change the zoning of a digital asset mining business without going through the proper notice and comment.
(3) A digital asset mining business shall be able to appeal a change in zoning to the proper court of jurisdiction. A judge shall find a violation of this section and nullify such a change in zoning if the judge determines the change was done to discriminate against a digital asset mining business.
SECTION 6. (1) Anyone engaged in home digital asset mining, a digital asset mining business, digital assets mining or exchanging digital assess for another digital asset on a blockchain protocol shall not be required to obtain a money transmitter license under the "Mississippi Money Transmitters Act," Chapter 15, Title 75, Mississippi Code of 1972, to engage in that activity.
(2) (a) It shall be legal in the State of Mississippi to operate a node for the purpose of connecting to a blockchain protocol, or a protocol built on top of a blockchain protocol, and transferring digital assets on a blockchain protocol, or to participate in staking on a blockchain protocol.
(b) Operating a node or a series of nodes on a blockchain protocol shall not require an individual or business to obtain a money transmitter license under the "Mississippi Money Transmitters Act," Chapter 15, Title 75, Mississippi Code of 1972, to engage in that activity.
(3) For the avoidance of doubt, a business offering to provide digital asset mining or staking as a service for individuals or to other businesses shall not be considered as offering a security or investment contract under the "Mississippi Securities Act of 2010," Chapter 71, Title 75, Mississippi Code of 1972.
(4) Notwithstanding any other provision of law to the contrary, no individual or entity shall face liability related to a specific transaction merely by validating such transaction if such individual or entity:
(a) Engages in digital asset mining;
(b) Operates a node or series of nodes on a blockchain network; or
(c) Provides digital asset mining, staking or offering staking as a service for individuals or other businesses.
SECTION 7. This act shall take effect and be in force from and after July 1, 2024.