By Jon Cassidy | Watchdog.org
HOUSTON – Texas is open for Bitcoin business.
LET IT RIP: Texas will not regulate virtual currencies such as Bitcoin.
State banking regulators announced last week that virtual currencies such as Bitcoin would not be treated as currency under state law, meaning that Texans can buy and sell goods and services with cryptocurrency free from regulatory interference.
However, most virtual currency exchanges, which turn your dollars into virtual money and back again, will be subject to state licensing requirements for money wiring services, such as a minimum net worth requirement of $500,000, according to a memo published April 3 by Banking Commissioner Charles G. Cooper.
Texas apparently is the first state in the country to establish regulatory policy for the $50-billion virtual currency market, according to Patrick Murck, general counsel to the Bitcoin Foundation.
“I don’t know that any other state has actually come out and clarified how their statutes apply and how their rules apply to the Bitcoin businesses, so that’s a positive thing,” Murck told moneyandtech.com. “Texas is a big, important market, and the Texas Department of Banking is a thought leader for other states, so it’s a very big deal, and frankly, I think they did a good job.”
The Department of Banking found that the definition of money under state law doesn’t apply to virtual currency for several reasons: it’s not backed by a government, it’s not legal tender, it “does not entitle its owner to anything, and creates no duties or obligations in a person who gives, sells, or transfers it. There is no entity that must honor the value of a cryptocurrency … The only way to convert a unit of cryptocurrency to sovereign currency is to find a willing buyer. Therefore cryptocurrencies as currently implemented cannot be considered money or monetary value under the Money Services Act.”
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