Kansas committee hears SB 39 legal-tender bill as supporters tout tax relief and opponents warn of new regulatory reach

The Committee on Financial Institutions and Pensions heard testimony on SB 39, the "Kansas Legal Tender Act," which would recognize certain gold and silver specie as legal tender in the state and remove the state capital-gains tax on exchanges of that specie if the bill is adopted.

Jason Thompson of the Office of Reviser of Statutes told the committee that the bill "creates the Kansas Legal Tender Act" and defines "legal tender" and "specie," specifying that specie "shall not be characterized as personal property for taxation or regulatory purposes," a change Thompson said would have tax implications and would take effect July 1 if passed.

Senator Mike Murphy, a sponsor of the measure, said SB 39 would eliminate the state portion of capital-gains tax on gold and silver when used as money and argued the change would help families preserve purchasing power amid inflation. "SB 39 would remove that state portion of that tax," Murphy said, and noted that other states have adopted similar laws, naming Arkansas, Florida, Louisiana, Texas and Missouri.

Proponents described modern technology that allows fractionalized gold or silver to be held in vaults and spent through debit-card-style arrangements. Murphy and other witnesses said those arrangements convert a portion of a vault holding at spot price to satisfy a purchase and leave physical holdings in secure storage, with storage and merchant fees applying.

Speakers including John Axtell of the Kansas Campaign for Liberty and Laurie Bolton of the Transactional Gold Project urged the committee to pass a "clean" version of the bill and warned that the Senate amendment (subsection e), which allows specie to be transacted by "physical or electronic means," could create confusion. Bolton told the committee some opposition messaging "is misleading and come[s] from a specific source" and identified the Sound Money Defense League as operating in partnership with Money Metals Exchange.

JP Cortez, executive director of the Sound Money Defense League, said he supported many parts of the earlier draft but strongly opposed the amended version. Cortez warned that, "As written, there is not there is no way to say that mom and pop coin dealers wouldn't be roped under this," arguing subsection e could subject numerous dealers and small businesses to the Kansas Money Transmission Act and related licensing and compliance costs.

Witnesses and members discussed possible fixes. Committee members asked whether narrowing subsection e to only electronic means or clarifying that one-on-one physical retail sales are not "transmission" could prevent small retailers from falling under the Money Transmission Act. Jason Thompson and several proponents said the language could be refined; opponents said the simplest remedy would be to remove the Senate amendment and pass the introduced bill.

No vote was taken; the chair closed the hearing and said there was no further business. The committee did not record a formal motion or vote during the session. The bill remains in committee while members consider whether to amend subsection e or pursue separate legislation to address money-transmission jurisdiction.

Key authorities and references discussed at the hearing include the Kansas Money Transmission Act and constitutional language cited by proponents (Article I, Section 10). The committee also discussed operational details such as vault storage, spot pricing for transactions, and an effective date in the bill text of July 1.