[UPDATED] Virginia Legislature Passes Bill Regulating Fiduciary Access To Digital Assets
UPDATE: On February 17, 2017, Governor McAuliffe approved Virginia House Bill 1608 (“HB 1608”), the Uniform Fiduciary Access to Digital Assets Act, which provides digital asset management guidelines to fiduciaries. HB 1608 will go into effect on July 1, 2017.
Within one month, the Virginia legislature unanimously passes House Bill 1608 (“HB 1608”), which provides digital asset management guidelines. The Bill, also known as the Uniform Fiduciary Access to Digital Assets Act, was introduced on January 11, 2017, by Delegate James A. Leftwich (R-78), and unanimously approved by the House on January 26. HB 1608 then went to the Senate, which also unanimously approved the Bill on February 8. Prior to being passsed by both chambers, the Bill had also received unanimous approval from each chambers’ Committees for Courts of Justice. Governor McAuliffe has until February 20, 201, to sign or veto the legislation. The swift passage and overwhelming support for this legislation signals a commitment to providing meaningful probate procedures for virtual currency and other digital assets.
The Bill defines a fiduciary as “an original, additional, or successor personal representative, conservator, guardian, agent, or trustee.” Essentially, fiduciary parties are those entrusted with managing another’s property or assets through a legally binding document or procedure. The duties of care, loyalty, and confidentiality listed in this Bill apply to the following types of fiduciary parties:
- A fiduciary acting under a will or power of attorney;
- A personal representative acting for a decedent;
- A conservatorship proceeding;
- A guardianship proceeding; and
- A trustee acting under a trust.
The Bill goes on to define digital asset as “an electronic record in which an individual has a right or interest,” but not “an underlying asset or liability unless the asset or liability is itself an electronic record.” Digital assets include, among other things, computer files, web domains, and virtual currency. The Bill also restricts a fiduciary’s “access to electronic communications such as email, text messages, and social media accounts unless the original user consented to such access in a will, trust, power of attorney, or other record.” The remainder of the Bill discusses procedures for carrying out the fiduciary duties, timelines for doing so, and available remedies.
The duties of care, loyalty, and confidentiality have long been required of fiduciaries handling different types of property and assets. This Bill provides guidance specific to a fiduciary’s responsibility regarding digital assets and communication. Digital accounts, communication, and investments have become increasingly popular and the Virginia legislature’s overwhelming support of this Bill shows that meaningful legislation is necessary to ensure that fiduciary parties entrusted to manage digital property are held to the same standard as they are for other types of property. New Jersey has also begun considering its own Uniform Fiduciary Access to Digital Assets Act to provide fiduciaries with similar guidance regarding digital property and assets. This type of legislation will allow individuals to have more confidence while investing in virtual currency because it provides guidance for the transfer of investments in specified ways, guides fiduciary parties in exactly how to disclose digital assets, and provides remedies in the event the proper procedures are not carried out.