We’re optimistic about the final meeting of the ULC committee drafting a model virtual currency law. This process began all the way back in October of 2015, and since then the drafting committee–a group of super sharp law professors and legal minds–has met on four separate occasions across the US, from Chicago to Palo Alto, Washington DC to the Twin Cities. The product of all these efforts is the URVCBA (the Uniform Regulation of Virtual Currency Businesses Act). It may not be the most elegant name but the substance of this model law is shaping up to be streamlined and on-point.
Most importantly, as drafted, it carefully circumscribes the set of business activities dealing in virtual currencies like bitcoin and ether that require any sort of license from state banking regulators. That careful specification was designed with legislative language from our Framework for State Regulation of Virtual Currencies, language that clearly limits the licensing requirements to truly custodial businesses who hold other people’s valuables.
In preparation for this final meeting in Chicago, we’ve again submitted written comments (and I’m on a plane as we speak to advocate in person). Most of our recent comment letter is nitpicking, ensuring that essential definitions dealing with what it means to have “control” of other people’s virtual currency are as clearly and justiciably drafted as possible. These key definitions should ensure that no individual or business acting on its own behalf (buying or selling own virtual currency for its own purposes) or providing bitcoin or ethereum software or services that do not involve taking custody of other people’s bitcoin or ether (e.g. software wallet developers, miners, stakers, full nodes, lightning nodes, multi-sig key recovery providers, smart contract oracles etc.) are ever required to be licensed by a state banking regulator in order to engage in those activities.
We are also weighing in on the dual licensure question, insisting that companies who already have money transmission licenses in several states (all of the larger US-based exchanges) should not need to obtain a separate virtual currency license. Fifty licenses is already a lot (and, as we’ve said, we hope the OCC’s Fintech charter can relieve some businesses of that burden) but 100 is simply absurd. There are a few other details in our comment related to minimum capital and solvency requirements; if that sort of thing is your bag, take a look at our full letter.