The US Conference of State Bank Supervisors (CSBS) has produced a draft framework for its idea of digital currency regulation, and is now taking 60 days’ worth of public comments.
The proposals come under the guise of suggestions, mirroring the organization’s position as a bystander with no direct influence on state policy. Commentators, however, have already likened much of the draft’s content to the New York Department of Financial Services’ BitLicense proposals.
The CSBS writes introducing the draft:
“After engagement with industry participants, state and federal regulators, and other stakeholders, CSBS recommends that activities involving third party control of virtual currency, including for the purposes of transmitting, exchanging, holding, or otherwise controlling virtual currency, should be subject to state licensure and supervision.”
In particular, the CSBS calls for tighter vetting of businesses and increased consumer data surveillance across the board. State licenses are also suggested to govern “entities engaged in virtual currencies.”
The draft specifically mentions:
“Transaction-level data, including, but not limited to:
I. Names, addresses, and IP addresses of parties to transaction
II. Identifiable information of virtual currency owner
III. Transaction confirmation
IV. For foreign transactions, country of destination”
Such a level of data collection is unlikely to please community figures, with centralized storage of information widely regarded as a security risk in and of itself.
“This effort included an assessment of virtual currency activities and outreach with a broad range of stakeholders,” the introduction continues, with the draft described as “technology neutral.”
The CSBS nonetheless states the “importance of applying the Draft Framework requirements in a manner that includes flexibility to adapt regulation and oversight to yet unforeseen changes,” including “to facilitate and not inhibit continued innovation.”
Unlike BitLicense, which is confined to New York State, the implications of the CSBS’ proposals could extend country-wide should they be enacted in any form by lawmakers.
Australia meanwhile produced something of a red herring this week, with the Australian Securities and Investment Commission (ASIC) declaring digital currencies to “not fit within the current legal definitions of a ‘financial product.’”
The submission by ASIC to the Senate inquiry into digital currency regulation further suggested that operators did not require a license in order to conduct business. However, since standard exchanges convert and hold fiat as part of their operations, they should technically still require a license, according to existing legislation.
“An Australian financial services (AFS) license in order to: (I) trade in digital currency; (II) hold a digital currency on behalf of another person; (III) provide advice in relation to digital currency; and (IV) arrange for others to buy and sell digital currency,” the official submission states.
Elsewhere, criticism has been leveled at the Australian Tax Office’s (ATO) treatment of digital currency transactions, with Australian Digital Currency Commerce Association Ronald Tucker telling the Senate Committee it “could result in driving the digital currency businesses that [are] emerging in the sector offshore and potentially underground.”
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