The drafting committee on the Regulation of Virtual Currencies held its first drafting committee meeting in Washington, DC, Oct. 9-11. The drafting committee has been charged with drafting a statute that will create an appropriate licensing regime for virtual currency transactions. Numerous observers from groups either involved in the creation, development, or maintenance of virtual currency systems or from organizations impacted by this emerging technology were present. The committee met all day Friday and Saturday, and Sunday morning. The discussion was open and very informative.
Because the draft act is contemplated as a licensing regime, the format of the first draft followed in many ways the format of the Uniform Money Services Act (promulgated by the ULC in 2000), and also followed the draft framework recently put forth by CSBS (Conference of State Bank Supervisors) as a starting point. The draft also borrowed definition language from the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”), and, to a lesser extent, from the final “Bitlicense” regulation that has been promulgated by the New York State Department of Financial Services. The present draft includes licensing requirements, reciprocity and use of licensing systems, requirements for financial strength and stability, provisions aimed at cybersecurity, and provisions on the books and records, supervision and enforcement, compliance with other laws, and consumer (or more broadly “user”) protections including disclosure, and substantive provisions such as a dispute resolution procedure.
The draft is unlikely to consider virtual currency issues arising from its treatment as “property” since this aspect can be treated in other uniform laws such as the Uniform Unclaimed Property Act.
The committee also is mindful of the way any uniform act must relate to expected federal regulation through the CFPB (Consumer Financial Protection Bureau) and FinCEN. The committee must also balance the goal of uniformity with flexibility, so that the completed act is not only enactable in 53 jurisdictions, but is also flexible enough so as not to frustrate innovation in an area that is still rapidly developing.
The goal of the drafting committee is to complete the statute as soon as possible. The current draft of the Regulation of Virtual Currencies Act is posted on the ULC website, and can be found here.
Fred Miller, Chair, Drafting Committee on Regulation of Virtual Currencies