30-24-102. Definitions. As used in this part, the following definitions apply:

(1) "Affiliate persons" means a person who owns more than 10% of a digital asset or network token from the current available supply.

(2) "Blockchain" means data that is:

(a) shared across a peer-to-peer network to create a ledger of verified transactions or information among network participants linked together using cryptography to maintain the integrity of the ledger and to execute other functions; and

(b) distributed among network participants in an automated fashion to concurrently update network participants on the state of the ledger and any other functions.

(3) "Blockchain protocol" means any executable software deployed to a blockchain, typically referred to as smart contracts, including an additional standardized set of rules that uses a previously existing blockchain as a base, which facilitates the transfer of data and electronic records and allows that data to be broadcast to nodes. The executable software is governed by a set of predefined rules that execute autonomously without human intervention. The rules may be altered by a predetermined mechanism.

(4) (a) "Central bank digital currency" means a digital currency, a digital medium of exchange, or a digital monetary unit of account issued by the United States federal reserve system or a federal agency that is made directly available to institutions or consumers by the entities, or which is processed or validated directly by the entities.

(b) The term does not include a digital asset backed by legal tender or government treasuries and issued by a private entity.

(5) "Commissioner" means the securities commissioner of the state.

(6) "Decentralized network" means, with respect to a blockchain protocol to which a network token relates, a network:

(a) where no person:

(i) has the unilateral authority, directly or indirectly, through a contract, arrangement, understanding, relationship, or otherwise, to control or materially alter the functionality or operation of the network; or

(ii) has the unilateral authority to restrict or prohibit a person who is not a digital asset issuer, related person, or an affiliated person from:

(A) using, earning, or transmitting a digital asset;

(B) deploying software that uses or integrates with the network;

(C) participating in a decentralized governance system with respect to the network; or

(D) operating a node, validator, or other form of computational infrastructure with respect to the network; and

(b) where no network token issuer or affiliated person beneficially owned, in the aggregate, 20% or more of the total amount of units of the network token that:

(i) may be created, issued, or distributed in the network; or

(ii) were freely transferable or otherwise used or available to be used for the purposes of the network.

(7) (a) "Digital asset exchange" means a trading platform that offers or seeks to offer a market in at least three digital assets.

(b) The term does not include a company organized under the laws of this state that sells network tokens exclusively.

(8) "Digital assets" has the same meaning as provided in 70-1-108.

(9) "Functional network" means, with respect to a blockchain protocol to which a network token relates, a network that allows network participants to use a network token for:

(a) the transmission and storage of value on the network;

(b) the participation in services provided by an application running on the network; or

(c) the participation in the decentralized governance system of the network.

(10) "Governing authority" means a board, commission, department, or other agency of the state or a political subdivision in the state.

(11) "Hardware wallet" means a physical device that is not continuously connected to the internet and allows an individual to secure and transfer digital assets. The term also includes a physical device under which the owner of digital assets retains independent control over the digital assets.

(12) (a) "Network token" means a digital asset as defined in 70-1-108 that is used for facilitating, coordinating, or enabling access to decentralized computing resources, consumer internet services, or internet infrastructure services via blockchain, including permanent or temporal data storage, computation, wireless access, data capture, audio or visual media hosting, audio or visual media streaming, and network bandwidth.

(b) In order to qualify as a network token, the token must:

(i) in the case of a token that is not speculative in nature, relate to a network that is a functional network; or

(ii) in the case of a token that is speculative in nature, relate to a network that is both a functional network and a decentralized network.

(c) The purchase or sale of a network token from a digital asset exchange or from a network token issuer directly does not affect its status as a network token.

(d) The term does not include:

(i) any digital assets that constitute a note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, or any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities, including any interest based on the value of these particular digital assets; or

(ii) any digital asset that, based on its terms and other characteristics, is, represents, or is functionally equivalent to an agreement, contract, or transaction that is:

(A) a contract of sale of a commodity as defined in section 1a of the Commodity Exchange Act for future delivery or an option on a contract of sale of a commodity;

(B) a securities futures product;

(C) a swap;

(D) an agreement, contract, or transaction described in section (2)(c)(2)(C)(i) or 2(c)(2)(D)(i) of the Commodity Exchange Act;

(E) a commodity option authorized under section 4c of the Commodity Exchange Act; or

(F) a leverage transaction authorized under section 19 of the Commodity Exchange Act.

(13) "Network token issuer" means an individual or corporation that produced the source code that runs and distributes a network token or creates a network token that is distributed to the public for use.

(14) "Node" means software run on a computer that does not exercise discretion over transactions initiated by the end user of the blockchain protocol and does any of the following:

(a) communicates with other devices or participants on a blockchain to maintain consensus and integrity of that blockchain;

(b) creates and validates blocks of transactions; or

(c) contains and updates a copy of a blockchain.

(15) "Self-hosted wallet" means a digital interface that is used to do both of the following:

(a) secure and transfer digital assets; and

(b) retain independent control over the secured digital assets by the owner of the digital assets.

(16) "Smart contracts" means computer programs that are hosted and executed on a blockchain network. Each smart contract consists of code specifying predetermined conditions that, when met, trigger outcomes.

(17) "Staking" means committing digital assets to a blockchain network to participate in the blockchain network's operations by validating transactions, proposing and attesting to blocks, and securing the network.

(18) "Staking as a service" means the provision of technical staking services, including but not limited to the operation of nodes and the associated infrastructure necessary to facilitate participation in blockchain networks' consensus mechanisms by the service provider on behalf of an individual or entity that owns the digital assets being staked.