US Regulation Continues to Develop whilst Texas Governor Signs Crypto Framework Law

Greg Abbott (R) gave life to a new piece of law that amends the Uniform Commercial Code, creating a new legal framework for cryptocurrencies and blockchains.

By
Chung Yee
on
June 6, 2021
Category:
Blockchain News

Acknowledging that Crypto is Here to Stay 

The crypto market receives a boost of confidence on Friday when Texas acknowledged cryptocurrencies and the blockchain industry by introducing a legal framework that facilitates adoption. The legal framework formally defines virtual currencies and creates a regulated environment for individuals and businesses to participate in crypto investment. Some people find Bitcoins narrative to be disruptive and anti establishment but with mass adoption and regulation, this narration will change. Texas’s adoption has joined the ranks of Wyoming as a crypto friendly state with a legislative framework that enables retail participation. 

In his tweet, Greg Abbott recognises that blockchain is a booming industry and Texas has to be involved.  

Wyoming had in 2019 passed a Digital Asset Law and it has definitively classified digital assets as property but divisible into 3 categories, namely digital consumer assets, digital securities and virtual currency. The framework allows for banks to provide custodian services, clarifying the jurisdiction of Wyoming courts and the perfection of security interests. 

Source

What to Expect from the Masterplan

In 2019, a working group was formed to formulate general policy structure with the aim of making Texas a leader in blockchain technology. It identifies four key areas of focus which are as follows:

  1. Identify the economic growth and development opportunities presented by blockchain technology
  2. Assess the existing blockchain industry in the state
  3. Review workforce needs and academic programs required to build blockchain expertise across all relevant industrie 
  4. Make legislative recommendations that will help promote innovation and economic growth by reducing barriers to and expediting the expansion of the state ’s blockchain industry.

The announcement by the governor is not the result of the euphoria surrounding the crypto market. It has been identified in 2019 and a blueprint has been laid down to look into the various opportunities that the blockchain can present. Whilst the contents of the masterplan has not been revealed, generally what can be expected would be clarity in the classification of the various crypto assets, the roles of banks as part of the ecosystem and a comprehensive regulatory framework for compliance through the issuance of licenses and implementation of proper audit standards. 

The three board categories mentioned above are the more pressing issues that a clear framework can help illuminate. It also serves the purpose of aiding regulators in drafting policy concerning cryptos and the related industries. We have seen how the lack of legislative cohesiveness presents itself in the case of SEC v Ripple when fundamental legal issues such as the classification of digital assets become the thrust of the suit. 


The Biden Administration’s Crypto Policies

The nation could be battling a deadly pandemic but the clarion call for a legal framework on crypto is getting louder. Regulators have given stern warnings in efforts to prevent fraud, scam and manipulation but the nation has yet to see a blueprint of the crypto regulation. Recognising the need for an inter agency crypto policy group, the acting Comptroller of the Currency, Michael Hsu concedes that the existing framework is ill equipped to deal with the dynamics of the crypto industry. Gary Gensler on the other hand warned ‘bad actors’ of legal repercussions in perpetuating frauds and scams. Jerome Powell confirms that the Federal Reserve will soon be publishing a research paper on a CBDC for the American dollar. 

The regulators are starting to piece together issues that matter. In the meantime, industry players can only rely on existing frameworks which are ill-suited to meet the intricacies in crypto technology. Perhaps it is time to consider a master plan just like what Texas did.

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance. His largest crypto holdings are Solana, Ethereum, and BNB Token.

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