Digital currencies and lawmakers are formally crossing paths ever more frequently. In the US, it is North Carolina which most recently took on the challenge of marrying them together with local legislation – more pragmatically, it would seem, than in New York.
While furor about the BitLicense scheme rages on further up the coast, NC’s primary financial regulator The North Carolina Commission of Banks (NCCOB) is mulling a refreshingly moderate approach for policy within state borders, coinfinance.com notes. The organization said yesterday:
“Our goal in promulgating administrative regulations is to clarify our regulatory position with respect to virtual currencies. Because we have some concerns about the ability of existing law to keep pace with changes in cryptocurrencies, further legislation may be necessary.”
This “keeping pace” is set to occur in the form of “clarification of existing law” contained in the NC Money Transmitters Act, with NCCOB making it clear that it does not wish to “change existing law” to create new rules for cryptocurrency-related entities.
The NC Money Transmitters Act currently requires all organizations involved in transmission of money to obtain a license from regulators, with each licensee having a consistent minimum net worth of US$100,000 at all times for the duration of the license agreement.
If this is already beginning to sound cumbersome, NCCOB nevertheless told coinfinance its aim is simply to “regulate virtual currency transmitters fairly and within the requirements of the NC Money Transmitters Act.”
Patchwork elephant?
However, moderation aside, the initial details to have been put forward thus far already have their fair share of potential pitfalls, which could create legislative headaches for crypto-companies already stung by Canada’s earlier move to enforce mandatory registration and similar. Like the above, once enacted, the North Carolina legislation will extend not only to domestic entities but also to any whose services are made available to that state’s residents.
And since the NCCOB “plans to evaluate each application on a case-by-case basis,” this could lead to no small number of requests.
The scope for disruption is amplified further by the Act’s definition of which entities should be classified as ‘Money transmitters’, which is as follows:
a) The sale or issuance of payment instruments or stored value.
b) The act of engaging in the business of receiving money or monetary value for transmission within the United States or to locations abroad by any and all means, including payment instrument, wire, facsimile, or electronic transfer.
Clearly, it is not simply cryptocurrency exchanges which would be required to abide by the legislation, and further details of how far it will reach are expected later. The NCCOB further states that the scheme would be subject to several rounds of public and legal debate before attaining its official form.
In the meantime, however, speculation may well grow regarding the ‘patchwork’ environment which appears to be brewing around digital currencies’ propagation. The idea of potentially every state requiring their own licenses for operators in the space is naturally unsavory, and it could well be that a more geographically wide-reaching system will need to be adopted in future.
Nevertheless, Bitcoin is still enjoying a welcome reception in the state, with former US Mint Director Edmund C Moy giving the keynote speech at the recent Cryptolina conference in the state capital Raleigh earlier this month.
“Ed Moy is widely respected among the finance and exchange industry, and is among the highest level officials yet to recognize both the future and inevitability of cryptocurrency. The Carolinas are thrilled to be hosting Mr. Moy’s first appearance at a Bitcoin conference,” organizer Faruk Okcetin commented in a press release.
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