Utah Admin. Code R25-25-4 - Service Provider Standards

(1) A service provider must have certification of liability insurance or regulatory capital and balance sheet strength sufficient to cover the full value of the transactions processed for the state.

(2) A service provider must provide a good and sufficient Surety Bond as a guarantee that the service provider will execute and settle all virtual currency conversion transactions as outlined in the contract. The Surety Company shall be a Surety Company legally authorized to do business in the state.

(3) A service provider must assume the costs associated with converting virtual currency to U.S. fiat currency.

(a) Any fees that a service provider charges for conversion must be added to the payment amount as opposed to netting fees from the payment amount.

(b) A service provider must be able to collect and remit any additional charges specified by the agency.

(4)

(a) A service provider must convert virtual currency to fiat currency and deposit the full payment amount in U.S. dollars to the bank account specified by the agency within two business days.

(b) A service provider may not require the transactions to be deposited in a wallet owned by the agency.

(c) A service provider must value the virtual currency at the point the transaction is initiated.

(5) A service provider must provide information necessary for the agency to properly credit the customer account and enable any necessary procedures for the payment to be posted correctly.

(6) A service provider must be able to provide SOC 1, Type 2 and SOC 2, Type 2 reports to the state, to provide assurance their blockchain or public record is secure when completing transactions.

(7) The State of Utah will publish a list of eligible assets. A service provider must accept eligible digital assets identified by the state.

(8) Digital asset issuers, exchanges and trading platforms, and intermediaries whose activities may increase risks to financial stability, should, as appropriate, be subject to and in compliance with regulatory and supervisory standards that govern traditional market infrastructures and financial firms, in line with the general principle of 'same business, same risks, same rules." Two things to cite: White House Fact Sheet about President Biden signing Exe Order on Ensuring Responsible Development of Digital Assets and a Federal Register about Ensuring Responsible Development of Digital Assets.

(9) The service provider must be compliant with Financial Crimes Enforcement Network (FinCEN), Office of Foreign Assets Control (OFAC), Know Your Customer (KYC) and Anti-Money Laundering requirements as established by the Securities Exchange Commission.

(10) A service provider must comply with any applicable state level money transmitter laws.

Notes

Utah Admin. Code R25-25-4

Adopted by Utah State Bulletin Number 2023-01, effective 12/16/2022