In 2013, the Minnesota Coin Bullion Dealer Law was passed introducing new regulations regarding the bullion trading. CoinsWeekly pointed out as early as in 2014 how problematic the definition of ‘bullion’ stated by this new law was as it applied to almost every coin. In fact, the regulation affected any dealer who wanted to sell to a Minnesota customer, no matter where the dealer was in the world, or even if they knew it was a Minnesota customer. The law has been enforced against many out of state dealers, and even a company outside the United States. Now, a lawsuit was filed in Federal Court to have the law declared unconstitutional.
Coin Enthusiasts Are Suing the State of Minnesota
A group of small business investors and coin enthusiasts are suing the State of Minnesota in an effort to decriminalize their small cap alternative investment and collection pursuits. A September 22, 2020, online press conference addressed this lawsuit and the current Minnesota law that makes it illegal to purchase or sell a combined annual total of over $25,000 in gold, silver, or other precious metals, without registering as a dealer and posting a surety bond. The lawsuit, filed by attorney Erick Kaardal of Mohrman, Kaardal & Erickson, P.A., declares this “Bullion Dealer Law” to be unconstitutional and an impediment to interstate commerce.
The filing details how coin collectors are being discriminated against (there is no comparable burden on art, stamp, sports cards, or other collectors) and how out-of-state dealers have stopped doing business in Minnesota for fear of inducing ordinary investors into crimes. The law, referred to by Numismatic News as “draconian,” has made it common practice for bullion dealers to reject Minnesota clients. This Minnesota law has isolated the state’s bullion investors from the national and world bullion market.
Minnesota Put at a Substantial Disadvantage
The challenged law even forces its mandate on individuals who choose to convert a portion of individual retirement account fund investments to silver or gold. It also applies to any coin – even those issued by the United States Mint. Investors and collectors whose total annual transactions are between $25,000 and $200,000 are required to post a surety bond of about $25,000. Most ancient coin dealers will not sell their coins to Minnesotans anymore. The law, passed in 2013, also requires a license to buy and sell bullion products, even those that have no special numismatic value.
Kaardal observed, “Minnesota’s regulation of bullion investors shows the state Department of Commerce’s economic illiteracy. An ordinary investor with aggregate annual purchase and sales of $25,000 is a criminal if they don’t register and post a surety bond. The department has criminalized ordinary commerce. It’s no wonder that no one wants to do business in Minnesota. A better law could have been written by a fifth-grader.”
Coin Collectors and Dealers Take Legal Action
Coin collectors and traders, including Tom Styczinski, who operates Tom “The Coin Guy,” LLC, Treasure Island Coins, Inc., and Numismatist United Legal Defense, an association of coin collectors and dealers, have filed the civil-rights lawsuit to protect their small businesses, which Minnesota law has criminalized.
Styczinski explained, “I buy and sell coins at weekend trade shows. I’m a part-time small business. This law was the result of an unholy alliance between the Department of Commerce and big coin dealers. They billed the law as a consumer protection statute, yet they went to the big telemarketers, those with terrible reputations within the industry, to write the legislation. Not surprisingly, this resulted in a law that monopolized the industry, devasted small operators, and made things far worse for Minnesota consumers. It is so poorly written it even turned many ordinary investors into criminals. This lawsuit is intended to fix that.”
“Some of the requirements of the law make it so onerous,” added Styczinski, “That I don’t know of a single small dealer that is able to comply with all the requirements that come along with being a registered dealer. If a registered dealer forgets to give out one receipt, they can be subject to a $10,000 fine. The requirements in the receipt are so crazy, it even makes it physically impossible for some dealers, particularly dealers in ancient coins, to comply with the law.”
A copy of the complaint filed September 22, 2020, in United States District Court for the District of Minnesota, by attorney Erick Kaardal of Mohrman, Kaardal & Erickson, P.A. on behalf of Tom Styczinski, d/b/a Tom “The Coin Guy,” LLC, Treasure Island Coins, Inc., and Numismatist United Legal Defense, in Thomas John Styczinski, et al. v. Grace Arnold, Commissioner of the Minnesota Department of Commerce, is available here.
Here you can read the 2014 article to find out what exactly is the problem with this law.