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Regulations
The Texas Banking Department has published new guidelines on the regulatory treatment of virtual currencies under the Texas Money Services Act. The document states that most transactions involving cryptocurrencies will not be considered a transfer of "monetary value" , but the exchange of virtual currencies for Fiat will probably be recognized as a "money transmission".
Read also: Other exchanges of Japanese cryptocurrencies subscribe to self-regulation
Texas Department of Banking Upgrades the regulatory position on cryptographic transactions
<img class = "alignright size-medium wp-image-270848″ title=”Texas Updates Regulatory regarding cryptocurrency activities” src=”https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_494317324-300×169.jpg” alt=”Texas Updates Regulatory Guidance About Cryptocurrency Activities "width =" 300 "height =" 169 "srcset =" https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_494317324-300×169.jpg 300w, https: //news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_494317324-768×432.jpg 768w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_494317324-696×391.jpg 696w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_494317324-747×420.jpg 747w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_494317324 .jpg 1000w "sizes =" (maximum width: 300px) 100vw, 300px”/>On January 2, the Texas Banking Department published a supervisory memorandum providing an up-to-date regulatory guidance on the treatment of cryptocurrencies under state law.
While the memorandum notes that bitcoin and cryptocurrencies have "triggered a new discourse on the nature of money" and on the "transferability of value", the document emphasizes that it seeks only to express the interpretation of the Texas Money Services Act in relation to activity involves cryptocurrencies according to the existing statutory definitions.
Guidelines Classify virtual currencies as "centralized" or "decentralized"
The guidelines classify the cryptocurrency based on their centralization, with virtual decentralized currencies described as not "created or emitted by a particular person or entity", as well as having "no administrator and no central repository".
Centralized virtual currencies, document states, are defined as "create <img class =" alignright size-medium wp-image-270843″ title=”Texas Updates Regulatory regarding cryptocurrency activities” src=”https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1061532569-1-300×200.jpg” alt=”Texas Updates Regulatory Guidance About Cryptocurrency Activities "width =" 300 "height =" 200 "srcset =" https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1061532569-1-300×200.jpg 300w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1061532569-1-768×512.jpg 768w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1061532569 -1-696×464.jpg 696w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1061532569-1-630×420.jpg 630w, https://news.bitcoin.com/wp-content /uploads/2019/01/shutterstock_1061532569-1.jpg 1000w "sizes =" (maximum width: 300px) 100vw, 300px”/>and issued by a specific source, "adding that" they rely on an entity with some for authority or currency control ".
Stablecoins are described as including a "subclass" of centralized virtual currencies. Regarding the regulation of money transmission, the memorandum states that "an important aspect" of stablecoins that are supported by sovereign currencies is the "redemption right that allows the stableco holder to redeem the currency in legal currency from the issuer".
The memorandum adds that "Some experts consider cryptocurrency as a new class of activity that is neither currency nor commodity, but that has characteristics of both, as well as characteristics of neither."
Licensing considerations regarding cryptocurrency companies
<img class = "alignright size-medium wp-image-270852″ title=”Texas Updates Regulatory regarding cryptocurrency activities” src=”https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_424977874-300×212.jpg” alt=”Texas Updates Regulatory Guidance About Cryptocurrency Activities "width =" 300 "height =" 212 "srcset =" https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_424977874-300×212.jpg 300w, https: //news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_424977874-768×544.jpg 768w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_424977874-100×70.jpg 100w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_424977874-200×140.jpg 200w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_424977874 -696×493.jpg 696w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_424977874-593×420.jpg 593w, https://news.bitcoin.com/wp-content/uploads/2019 /01/shutterstock_424977874.jpg 1000w "sizes =" (maximum width: 300px) 100vw, 300px”/>The Texas Department of Banking notes that in many cases the "factors that distinguish the various centralized virtual currencies can be complicated and nuanced" and, as such, the regulator "must individually analyze centralized virtual monetary schemes".
The document states that licensing decisions relating to transactions involving virtual currencies will be decided "on the sole question" whether the cryptocurrency should be considered "money or monetary value" under the Law on Monetary Services.
The guidelines also state that the exchange of virtual currency for the sovereign currency is not considered to include "currency exchange" under the Texas Financial Code, adding that the code defines currency for exchange purposes as "currency and US card or any country that is designated as legal tender. "
Political implications of the new Texas guidelines
<img class = "alignright size-medium wp-image-270845″ title=”Texas Updates Regulatory regarding cryptocurrency activities” src=”https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1014100048-300×200.jpg” alt=”Texas Updates Regulatory Guidelines for Cryptocurrency Activities "width =" 300 "height =" 200 "srcset =" https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1014100048-300×200.jpg 300w, https: //news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1014100048-768×512.jpg 768w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1014100048-696×464 .jpg 696w, https://news.bitcoin.com/wp-content/uploads/2019/01/shutterstock_1014100048-630×420.jpg 630w, https://news.bitcoin.com/wp-content/uploads/2019/01 / shutterstock_1014100048 .jpg 1000w "sizes =" (maximum width: 300px) 100vw, 300px”/>While the document states that "it does not offer a general guide on the treatment of centralized virtual currencies, with the exception of the stablecoin supported by the sovereign government", a series of general policy assertions are made regarding cryptocurrency activities.
In general, the memorandum states that without the involvement of a fiat currency in a transaction, there has been no transmission of money on the basis of existing statutes. However, cryptocurrency transactions involving sovereign money "may" include money transmissions "depending on how the sovereign currency is handled." The document adds that "A license analysis will be based on sovereign currency management".
The guidelines observe that the exchange of cryptocurrency in exchange for legal tender between two parties is not the transmission of money, but rather "a sale of goods between two parties". The exchange of cryptocurrency in exchange for another cryptocurrency, in addition to the "transfer" of cryptocurrency per se "also falls outside the legal definition of money transmission.
However, the "exchange of cryptocurrency for sovereign currency through a third-party exchanger" is generally considered to be a cash transmission. Furthermore, the "exchange of cryptocurrency for sovereign currency through an automated machine" is "usually but not always" considered as including the transmission of money.
What is your answer to the updated interpretation of the Texas banking department regarding the state financial services law on virtual currencies? Share your thoughts in the comments section below!
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