ULC's Uniform Regulation Of Virtual Currency Businesses Act Creates Divide
The Uniform Law Commission (ULC) will commence with their vote on the proposed Uniform Regulation of Virtual Currency Businesses Act. The regulation seeks to harmonize state laws for businesses that utilize virtual currencies as monetary tools, and includes provisions for licensing requirements, reciprocity, consumer protection, cybersecurity, anti-money laundering, and licensee supervision.
Despite the promise of providing “assurance to persons using virtual currency products and services,” the regulation has caused a divide within the virtual currency community. Most recently, Llew Claasen, Executive Director of the Bitcoin Foundation, pleaded to the National Conference of State Legislators, a bipartisan non-governmental organization that represents staff and members of American state legislatures, to reject any and all proposed legislation modeled after the Uniform Regulation of Virtual Currency Businesses Act. This letter follows a similar request by Claasen to the ULC asking it not to adopt the model act. In both statements, Claasen argued that, due to similarities shared with the New York BitLicense regulation, the act will “threaten the very existence of small fintech businesses nationwide.”
The proposed act has also garnished the attention of Theo Chino, virtual currency entrepreneur and plaintiff in the Chino v. the New York Department of Financial Services (NYDFS) case. In 2015, Chino filed suit to challenge the legality of the New York BitLicense after claiming that state authorities were using virtual currency entrepreneurs as “guinea pigs.”
Chino tells ETHNews, “I have been preparing in the event a vote take place and I have been asking all the State Legislators to ignore the ULC packet.”
In a letter to Liza Karsai, Executive Director of the ULC, the Ciric Law Firm, which represents Chino, expressed their grievances with the act. Ciric stated that it is neither “desirable nor practicable” for the ULC to propose a model act when many states still have conflicting legal views, and that further consideration should be taken into account as legal challenges to the framework could occur in the foreseeable future.
Despite these criticisms, the proposed act has received tremendous support from a large number of firms currently active in the virtual currency industry. In a recent letter published on Coincenter, which worked with the ULC, fifteen CEOs from enterprises currently conducting business with virtual currencies came out in favor for the uniform act. In the letter, the group argued that the act draws a “clear distinction” between those who should be licensed and those who should not, and will function as an “excellent model” for states to follow. In addition, the group contended that the licensing requirements set forth by the ULC are “reasonable” and would resolve uncertainties that currently exist with states that have already adopted money transmission and virtual currency licensing laws. As per the letter:
“We hope the full Uniform Law Commission will adopt the model act so that it can serve as a reasonable option for states who wish to ensure consumers are protected while protecting innovation.”
The ULC’s decision is expected to come out today, and if adopted, the model act will send shockwaves through the virtual currency industry and could potentially establish a foundation for virtual currency enterprises to engage in business without doubt and ambiguity.
ETHNews will continue to update this story.