When it comes to cryptocurrency regulations, lawmakers are jousting with different opinions and viewpoints. Some believe that Bitcoin should be regulated, while others are firm that Bitcoin should be left to its own devices.
Before legislators can take action, they must understand the nature of Bitcoin and other cryptocurrencies. This is a great challenge because the Blockchain Technology must be understood, as well as its impact on different industries. Even though many experts think that US is a step behind Bitcoin regulation, there seems to be ongoing progress this 2017.
Let's take a look at the current regulation landscape in five prominent US States: Washington, Illinois, Hawaii, California, and Florida.
Washington legislators have started creating new rules that will encompass Bitcoin transactions. Businesses with digital currency services are covered by these rules. The Senate Bill 5013 clarifies the definition of Cryptocurrency and includes various disclosure requirements on consumer information. The bill will also require online currency exchanges in Washington to maintain a surety bond.
The bill was introduced in January and it’s already cleared to be sent to Governor Jay Inslee. Speculations about the bill are mostly positive. Despite this regulation progress, some Cryptocurrency-based startups are having doubts operating in the state. Washington has also applied heavier cybersecurity frameworks.
When Secretary Bryan A. Schneider of the Illinois Department of Financial and Professional Regulation (IDFPR) announced a new initiative that contains several Cryptocurrency implications, some factors were clarified. The initiative, known as Digital Currency Regulatory Guidance, was focused on digital currencies like Bitcoin, Dogecoin, Litecoin, Ethereum, and ZCash. The guidance increased the regulation of numerous activities related with digital currencies.
According to Ciccolo, the IDFPR and Schneider will continue to deliver unwavering support to the innovation of Blockchain Technology. Ciccolo is also optimistic that Bitcoin technology will contribute to the financial innovation of Illinois.
Relying on public leverage, Coinbase – a well-respected Bitcoin and Ethereum exchange – announced that it ceased offering support for customers in the State of Hawaii. The reasons pointed out are the “impractical” regulatory policies concerning Bitcoin in that state. This was based on the notice received by Coinbase, indicating that Cryptocurrency operators must hold case reserves equivalent to the values held by customers.
Now that Hawaii is considering a bill that would create a working group focused on analyzing digital currencies and Blockchain technology, Coinbase leaders saw a new glimmer of hope. Once the bill is passed, Coinbase will resume working with regulators. This could mean a positive regulatory development for Hawaii.
Recently, California’s Assembly Bill 1123 – a counterpart of New York’s BitLicense – was proposed. Once passed, the bill would enact the Virtual Currency Act – an initiative that would prevent a person from engaging with virtual currency businesses unless that person is officially licensed by the Commissioner of Business Oversight or exempted from the requirement.
According to Kuskowski, the proposed bill should not be the direction to go in. Such level of regulation, just like BitLicense, caused New York to lose its prominence and status as a crypto hub. Apparently, with California’s position as tech innovation and startup capital of the world, the regulation will have greater catastrophic effects.
Now that Florida House Bill 1379 was passed, many people will be aware of the full definition of virtual currency. The bill will also regulate and prohibit the use of virtual currency for money laundering. The term ‘virtual currency’ was officially added to the main definition of “money instruments” based on Florida’s Money Laundering Act. The bill is now with Florida’s governor and is expected to be signed soon.
Kuskowski has also stated that a balance is needed among the side of legislators and Cryptocurrency users. People must also understand that a precise regulatory environment will help businesses in making strategic decisions. This way, many businesses can grow.
Bitcoin-friendly cities in the US
While most of the states in US prefer to have Bitcoin and other cryptocurrencies to be heavily regulated, there are a few Bitcoin-friendly states such as Nevada where Blockchain transactions are not taxed, Texas and New Hampshire.