The Evolution of Cryptocurrency Legislation in Maine Before 2023

Before 2023, the state of Maine had begun to actively engage with the evolving landscape of cryptocurrency and blockchain technology. This involvement was primarily evident in the state’s regulatory and enforcement efforts.

Regulatory Framework

Maine’s approach to cryptocurrency regulation, similar to many other states, was chiefly within the framework of its existing financial regulations, particularly those pertaining to securities and money transmission. The Maine Office of Securities, responsible for enforcing the state’s securities laws, played a pivotal role in this aspect. This Office, under the Maine Uniform Securities Act, held broad civil and criminal enforcement authority. Their jurisdiction included the licensing of broker-dealers, investment advisers, and the review of registration statements and exemption filings for securities issuers offering to sell securities in Maine​​.

As of October 18, 2021, Maine explicitly included “virtual currency” in its definition of money transmission. This inclusion marked a significant step in recognizing and regulating digital currencies under existing financial regulatory frameworks​​.

Enforcement Actions and Collaborative Efforts

The Maine Office of Securities aligned its priorities with those of the North American Securities Administrators Association (NASAA) Working Group, focusing on digital assets and cryptocurrency-related activities. This coordination was part of a broader effort to ensure consistency and effectiveness in dealing with the unique challenges posed by these emerging technologies. The enforcement priorities included targeting fraudulent activities involving digital assets and cryptocurrencies, particularly those conducted by broker-dealers, investment advisers, and financial services firms​​.

Notable Consent Orders and Settlements

Maine’s active engagement in regulating cryptocurrencies was further evidenced through its participation in multistate efforts, leading to several consent orders and settlements with companies involved in cryptocurrency-based products. For instance, in June 2022, Maine’s Office signed a consent order with BlockFi Lending LLC regarding the offer and sale of interest-bearing digital asset accounts, known as BlockFi Interest Accounts (BIAs). These accounts allowed investors to lend digital assets to BlockFi in exchange for a variable monthly interest payment paid in cryptocurrency​​.

Another significant action occurred in February 2023, when Nexo Capital, Inc. reached a settlement related to its offer and sale of interest-bearing digital asset accounts called “Earned Interest Product” (EIP). This settlement was crucial as it addressed issues related to the lack of disclosure of material information by Nexo regarding the EIP’s interest generation, regulatory compliance, and financial stability​​.

Legislative Initiatives

Apart from regulatory enforcement, Maine also took legislative initiatives to better understand and integrate blockchain technology. One such initiative was LD 909, which directed the commissioner of Economic and Community Development to establish a blockchain technology working group. This move indicated Maine’s interest in exploring the potential applications and implications of blockchain technology beyond cryptocurrencies​​.

Conclusion

In summary, prior to 2023, Maine’s cryptocurrency legislation landscape was characterized by a gradual but steady incorporation of digital currencies into its existing regulatory framework, active enforcement against fraudulent activities, and exploratory initiatives in blockchain technology. These efforts represented Maine’s cautious yet proactive approach to embracing the complexities and opportunities presented by the rapidly evolving world of cryptocurrencies and blockchain.