What you need to know about Cryptocurrency: Part 5
The yeoman’s work in preparation for legislation and regulation of cryptocurrency has begun. One might say the we are at the beginning of the beginning of regulation of cryptocurrency.
De Facto Federal Legislation of Cryptocurrency is Nigh
By Wendy McElroy
July 11, 2017
The Uniform Law Commission (ULC) is holding its 126th Annual Meeting in San Diego on July 14-20. The ULC is a body of legal experts who create model templates for statute law on issues that are considered to be inconsistently or insufficiently legislated throughout the various states. The July meeting will address how state statutes should define terms like “bank, create” and it will hammer out a draft proposal entitled the “Uniform Regulation of Virtual Currency Businesses Act.”
If the ULC succeeds in sculpting a final template, as it is fully expected to do, then the model act will be submitted to individual state legislatures for their approval. The legislatures have a long track record of adopting bills based on the ULC’s language with little or no change.
Below is an overview of the proposed act.
The Uniform Regulation of Virtual Currency Businesses Act creates a statutory framework for regulating virtual currency business activity, which includes businesses engaged in the exchange of virtual currencies for cash, bank deposits, or other virtual currencies; the transfers of virtual currency between customers; and certain custodial or fiduciary services. The act includes provisions on licensing requirements; reciprocity; consumer protection; cybersecurity; anti-money laundering; and supervision of licensees. Virtual currency can be simply defined as a form of electronic value, the value of which depends on the market. It is not backed by government (so that it lacks status as legal tender). The interest in virtual currency arises because it is allegedly safer from hacking, often cheaper and faster, and has finality of payment. Virtual currencies have legitimate purposes and can be purchased, sold, and exchanged with other types of virtual currencies or real currencies.
US Accounting Standards Body Weighs New Digital Currency Rules Body Weighs New
by Stan Higgins Currency Rules
Jul 12, 2017
The Financial Accounting Standards Board (FASB), a financial accounting standards body in the US, is reportedly considering whether to undertake a new initiative on digital currencies.
According to Reuters, the FASB – which sets accounting standards for publicly traded US firms – hasn’t yet decided if it will develop new guidelines for companies dealing with bitcoin and other cryptocurrencies. However, the non-profit is apparently assessing whether it should begin that process following a request from the Washington, DC-based Chamber of Digital Commerce – a trade organization for companies and groups working in the digital currency and blockchain space.
In a letter to the board, dated June 8, CDC founder and president Perianne Boring argued that the lack of standards is creating a barrier for both investors and entrepreneurs:
“The absence of accounting standards for digital currencies is a mission critical issue for companies seeking to invest and innovate in this exciting technology frontier and may hold back economic growth in the United States.”
If it does undertake the initiative, the FASB would not be alone among the world’s accounting standards groups who have begun developing new frameworks. Among those is the Australian Accounting Standards Board, which in November argued for global action in this area.
Further, a group of accounting firms including PwC, Deloitte and EY, among others, formed a new coalition last year aimed at promoting new standards for digital currency. The CDC, too, has previously launched an advocacy effort, dubbed the Digital Assets Accounting Coalition.
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This series has been extended to a Part 6. Stay tuned for more need to knows about Cryptocurrency. Part 6 of this series will present information on how blockchain may disrupt a number of industries. The use of the term disrupt is intentional and although these are predictions the possibilities of these changes to our business and personal worlds is growing daily.