HB 825

UNOFFICIAL COPY  26 RS BR 2468
1AN ACT relating to digital assets.
2 Be it enacted by the General Assembly of the Commonwealth of Kentucky:
3Section 1. KRS 369.130 is amended to read as follows:
4 As used in KRS 369.130 to 369.139:
5 (1)    "Blockchain" means data that is:
6(a)     Shared across a peer-to-peer network to create a ledger of verified
7transactions or information among linked network participants using
8cryptography to:
91.       Maintain the integrity of the ledger; or
102.       Execute other functions; and
11(b)     Distributed in a concurrent, automated update to network participants on the
12state of the ledger and any other functions;
13 (2)    "Blockchain network" means a technical infrastructure that provides ledger and
14smart contract services to applications;
15 (3)    "Blockchain protocol" means any executable software:
16(a)     Deployed to a blockchain, including an additional standardized set of rules
17that:
181.       Uses an existing blockchain as a base;
192.       Facilitates the transfer of data and electronic records;
203.       Allows that data to be broadcast to nodes; and
214.       Is governed by a set of predefined rules which execute autonomously
22without human intervention and can be altered by a predetermined
23mechanism; and
24(b)     Composed of a source code that is publicly available and accessible, including
25a smart contract or any network of smart contracts;
26 (4)    "Cryptocurrency" has the same meaning as in KRS 139.516;
27 (5)    "Cryptography" means the practice of coding information to ensure only the person
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1that a message was written for can read and process that information;
2 (6)    "Digital asset" means:
3(a)     Virtual currency;
4(b)     Cryptocurrency; and
5(c)     Natively electronic assets, including stablecoins, fungible tokens, and
6nonfungible tokens;
7that confer economic, proprietary, or access rights or powers;
8 (7)    "Hardware wallet" means a physical device that:
9(a)     Stores private keys offline;
10(b)     Provides a way to sign transactions and interact with the blockchain; and
11(c)     Allows the owner to retain independent control over the digital asset
12contained therein;
13 (8)    "Natively electronic asset" means a purely digital asset that exists only on the
14blockchain network;
15 (9)    "Node" means a computer which:
16(a)     Uses software to:
171.       Communicate with other devices or participants on a blockchain to
18maintain consensus and integrity of that blockchain;
192.       Create and validate transaction blocks; or
203.       Contain and update a copy of a blockchain; and
21(b)     Does not exercise discretion over transactions initiated by the end users of the
22blockchain protocol;
23 (10) "Nonfungible token" means a digital asset on a blockchain that:
24(a)     Has unique identification codes and metadata that are recorded;
25(b)     Has been tokenized and cannot be replicated;
26(c)     Is used to certify ownership and authenticity; and
27(d)     Represents digital or physical items including artwork or real estate;
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1 (11) "Private key" means the access to manage digital assets at a specific internet
2address and may be used for encryption and digital signature;
3 (12) "Self-hosted wallet" means a digital interface that can:
4(a)     Secure and transfer digital assets; and
5(b)     Allow its owner to retain independent control of the secured digital assets and
6private keys;
7 (13) "Smart contract" has the same meaning as in KRS 42.747;
8 (14) "Stablecoin" means a digital asset that is:
9(a)     Issued by a corporation;
10(b)     Backed by cash or high-quality liquid assets; and
11(c)     Redeemable on demand by the holder at par for a fixed monetary value in
12equivalent United States dollars;
13 (15) "Staking" means using a node to commit digital assets to a blockchain network to:
14(a)     Validate transactions;
15(b)     Propose and attest to blocks contained in the blockchain; and
16(c)     Secure the network;
17 (16) (a)       "Staking as a service" means the provision of technical staking services by a
18service provider on behalf of an individual or business that owns the digital
19assets being staked.
20(b)     "Staking as a service" includes the operation of nodes and the associated
21infrastructure necessary to facilitate participation in blockchain protocols'
22consensus mechanisms;
23 (17) "Third-party wallet" means a wallet that:
24(a)     Is hosted and controlled by a party other than the owner; and[ which]
25(b)     Contains the private keys for the owner of digital assets; and
26 (18) "Wallet" means a digital interface or a physical device that[which] holds digital
27assets or private keys, and may include a:
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1(a)     Hardware wallet;
2(b)     Self-hosted wallet; and
3(c)     Third-party wallet.
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