treatise section - state laws

Dec 7

CRYPTOCURRENCY & DIGITAL ASSET LAW

oklahoma

DECEMBER 03, 2022

by Scott T. Beyea, Esq.

The Oklahoma State Capitol is the house of government of the U.S. state of Oklahoma. It is located along Lincoln Boulevard in Oklahoma City and contains 452,508 square feet of floor area.

Despite a glaring lack of clear federal law or regulatory clarity encompassing a comprehensive legal structure involving cryptocurrency, many state governments have started to enact some degree of statutory and/or administrative frameworks for regulating digital assets and cryptocurrency. At best, we have received some enforcement guidance from various regulatory agencies such as the SEC providing securities ‘framework’. ¹

Although global adoption of blockchain technology, cryptocurrency, and Web3 have seen a meteoric rise in our digital economy, multiple US states still haven’t enacted legislation.

Many states, including Oklahoma, still have no blockchain-specific laws in place.²

However, even with no specific laws in place, many states’ regulatory agencies have issued opinion letters and memoranda addressing concerns over the interplay between crypto and state laws.³

In Oklahoma, there are currently no comprehensive digital asset-specific regulations that exist.

Interestingly, in 2014, Oklahoma’s Legislature did insert an official comment to its statute regarding transfers of money and transfers of funds from deposit accounts, 12A O.S. §1-9-332. The comment stated:

[As of mid 2014, the use of so called “bitcoins” and the like seem to be gaining traction as a form of “currency,” i.e., as a payment method. Apparently some sellers are willing and able to take bitcoins in payment for goods or services sold. If that payment instead were made in cash, or by a check out of a deposit account, any security interest in that cash or account as proceeds of the claim of a secured party that has a security interest in inventory would not impair the further use of the payment by the seller for payment of debt or other transfers to a third party. See UCC sections 9-332, 9-315(a)(2), (c) and (d). This is a consistent policy under UCC Article 9 – see, for example, sections 9-320, and 9-321, and is particularly strong with respect to “currency.” However, section 9-332 cannot be construed to protect the receiver of bitcoins. Whether the policy mentioned above should allow a court to reach the same result remains a presently unanswered question.]

The Oklahoma Legislature made an explicit stance in that comment that a seller who accepts Bitcoin does not receive it free of an existing security interest.

Furthermore, Texas-based company Coinsource installed a bitcoin ATM in Oklahoma City in 2017, which was the first one installed in Oklahoma.⁴ They have since begun to pop up all over the state in various locations (even including a few gas stations in the “Shady 580” Lawton, America).⁵

A few pieces of crypto legislation have been introduced over the years and subsequently died in the chamber as a failed measure.⁶

However, Oklahoma has factually started the process (albeit very slowly) of legislating digital assets and cryptocurrency.

In April 2019, Oklahoma passed Senate Bill 700 which Oklahoma Senator Nathan Dahm helped write. It modified the definition of “electronic record” and “electronic signature” found in the Uniform Electronics Transactions Act to include records or signatures secured through blockchain technology. The bill was approved by the governor on April 25, 2019.⁷

This is the only enacted legislation involving digital assets and cryptocurrency within Oklahoma at the time of writing.

At first glance, this may appear nominal. In fact, it’s very important.

This is a foundation for future state-wide adoption that lays a framework consistent with the fundamentals of blockchain technology: cryptographically secure electronic transfers of value via E-signatures facilitated through private keys on distributed ledger technology.

Let’s analyze implications of these adopted legal definitions a bit further.

Okla. Stat. tit. 12A § 15-102 (“(6) “Digital signature” means a type of electronic signature consisting of a transformation of an electronic message using an asymmetric crypto system such that a person having the initial message and the signer’s public key can accurately determine whether:

(A) The transformation was created using the private key that corresponds to the signer’s public key; and

(B) The initial message has not been altered since the transformation was made.”)

Here, the Oklahoma legislature has clearly incorporated the language of cryptocurrency structure as it applies to digital signatures.

The Oklahoma government has formally recognized the existence and use of cryptographically secure digital signatures with public and private keys.

Further, in my interpretation, the legal definition in part (B) pointing out no alteration to the original message shows an understanding of the trustless nature of blockchain technology.

This Section of the Uniform Electronics Transactions Act states further:

Okla. Stat. tit. 12A § 15-102 (“(9) “Electronic record” means a record created, generated, sent, communicated, received, or stored by electronic means. A record or contract that is secured through blockchain technology is considered to be in an electronic form and to be an electronic record.

(10) “Electronic signature” means an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record. A signature that is secured through blockchain technology is considered to be in an electronic form and to be an electronic signature.”)

Once again, the Oklahoma legislature makes clear that it accepts records or contracts secured through blockchain technology as valid binding forms of electronic records through this formal acknowledgment.

What may seem minuscule is in fact a big step for the Sooner State towards progressive cryptocurrency legislation.

You may be wondering why these sections are relevant beyond that information as it relates to progressive Oklahoma law(s).

Essentially, Oklahoma has legally recognized e-Records, e-Signatures, and e-Contracts as valid and enforceable.

Okla. Stat. tit. 12A § 15-107:

[(a) A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.

(b) A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.

(d) If a law requires a signature, an electronic signature satisfies the law.]

With the rise of electronic signature tools such as DocuSign and AdobeSign being used in nearly every industry, the State of Oklahoma was wise to adopt these clear definitions into law.

Now, any underlying blockchain technology that meets the statutory definitions listed above is recognized and adopted specifically for (1) electronic records, (2) electronic signatures, and (3) electronic contracts within the State of Oklahoma.

It remains to be seen what further legislation will be enacted relating to digital assets and cryptocurrency.

Some important future legislation may include various topics such as formal recognition of legal tender, classifications and definitions of digital assets, guidelines for enterprise use, guidelines for taxation of digital assets, criminal and civil penalties specifically related to the transfer of cryptocurrencies, or regulations surrounding banking compliance (third party secure custody).

See SEC, Framework for “Investment Contract” Analysis of Digital Assets (2019): https://harvardlawreview.org/2019/06/sec-framework-for-investment-contract-analysis-of-digital-assets-2019/.↩
At time of writing, these states include the following: Arkansas, Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee and Wisconsin.↩
See, e.g., I.D. Dep’t of Fin., Idaho Money Transmitter No-Action and opinion letter (Oct. 11, 2017), available at https://www.finance.idaho.gov/legal/no-action-opinion-letters/money-transmitter/documents/digital-currency/2017-10-11.pdf↩
Abby Bitterman, “Oklahoma Gets Its First Bitcoin ATM,” NewsOK, July 9, 2017, available at https://www.oklahoman.com/story/business/information-technology/2017/07/29/oklahoma-gets-its-first-bitcoin-atm/60584990007/↩
See https://bitcoindepot.com/locations/118-ne-rogers-ln-lawton-ok-73507-bitcoin-atm/↩
See Oklahoma Senate Bill 590, “The Commercial Digital Asset Mining Act of 2022”, available at https://trackbill.com/bill/oklahoma-senate-bill-590-digital-asset-mining-establishing-the-commercial-digital-asset-mining-act-of-2022-providing-for-ce/2238015/↩
Okla. Stat. tit. 12A § 15-102, legislative history available at https://legiscan.com/OK/bill/SB700/2019↩