Table of Contents
State Laws that Affect the Issuance of Local Currencies
Arkansas Code Section 4-17-102 on Notes, tickets, etc. — Creation or circulation as currency by individuals unlawful provides:
(a) No person unauthorized by law shall intentionally create or put in circulation, as a circulating medium, any note, bill, bond, check, or ticket, purporting that any money or bank notes will be paid to the receiver, holder, or bearer, or that it will be received in payment of debts or to be used as a currency or medium of trade in lieu of money.
(b) If any person issues, puts into circulation, signs, countersigns, or indorses any such note, bill, bond, check, or ticket, he or she shall be indicted, and upon conviction shall be fined not less than fifty dollars ($50.00) nor more than three hundred dollars ($300) and shall be imprisoned not exceeding twelve (12) months.
In the California Corporations Code, which is not a logical place for a law about currencies, there is a provision that states that: “No corporation, flexible purpose corporation, association or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.” Cal. Corp. Code Section 107. Dating back to 1849, this law is outdated, vague, and serves little purpose in the complex and dynamic economy of the 21st century. Such a provision leaves many open questions: What is money? What is lawful money? (There is something dizzyingly circular about a law that says it is illegal to do illegal things.) What is “of the United States?” What is circulation? It appears that California does not actively enforce this provision; otherwise an enforcement agency could have a heyday in Silicon Valley, cracking down on every website that allows “points” or “credits” to be used as money.
California Alternative Currencies Act: As of May 2014, there is now a bill in the California Legislature, AB 129, which amends Corporations Code Section 107 to allow for the circulation of “alternative currencies.” Click here to read more about the bill and how you can get involved! Prior to the introduction of this bill, SELC worked to propose a bill in 2013 to simply remove Section 107 from California law. Read the former bill language here.
Massachusetts has three laws imposing fines on people who put new currencies into circulation. It’s likely that the laws were written by someone wearing a powdered wig, because the laws reference the British provinces of North America, and the penalties are very low. It is not clear how a fine would be applied and how often someone could be fined if they continue to violate the law. More research could help clarify these questions.
MA General Laws Part IV, Title I, Ch. 267, Section 21: Notes, bills, orders or checks as currency: “Whoever issues or passes a note, bill, order or check, other than foreign bills of exchange, the notes or bills of a bank incorporated by the laws of this commonwealth, of the United States, of some one of the United States or of any of the British provinces of North America, with the intent that the same shall be circulated as currency, shall be punished by a fine of fifty dollars.”
MA General Laws Part IV, Title I, Ch. 267, Section 22: Notes, bills, orders or checks for less than five dollars, as currency: “Whoever issues or passes a note, bill, order or check, other than the notes or bills of a bank incorporated under the authority of this commonwealth, of the United States or of some one of the United States, for an amount less than five dollars, or whereon a less amount than five dollars is due at the time of such issuing or passing thereof, with intent that the same shall be circulated as currency, shall be punished by a fine of fifty dollars.”
MA General Laws Part IV, Title I, Ch. 267, Section 23: Bank notes or bills for a fraction of a dollar: “Whoever receives or puts in circulation as currency a bank note or bill which is, or a part of which is, for any fractional part of a dollar shall be punished by a fine of twenty-five dollars.”
Code of Virginia § 6.2-202(A) Issuance of currency and related prohibited acts. “No individual or entity, unless authorized by law, shall: 1) Issue any note, bill, scrip, or other paper or thing with intent that the same be circulated as currency; or 2) Otherwise deal, trade, or carry on business as a bank of circulation.”