Legislators in North Carolina are considering a bill that would clear up the state’s position and licensing requirements around so-called virtual currencies and blockchain technology.
The North Carolina Money Transmitter Act would clarify the state’s language and requirements relating to the currencies like bitcoin, blockchains and distributed ledger businesses.
For the Chamber of Digital Commerce, who made a presentation before the state’s Senate Finance Committee June 14 with other industry advocates, the bill would give some much needed definition to the state’s existing rules, according to president and founder Perianne Boring.
She said varied rules for money transmission from state to state make it difficult for some businesses to operate without the risk of breaking state and federal law.
“Obtaining and maintaining state licenses is an incredibly costly and burdensome process for any company to undergo, but it’s particularly difficult for virtual currency businesses. Most state money transmitter laws don’t clarify what types of virtual-currency-related businesses are required to obtain licenses,” she told Government Technology via email.
In total, the bill would effectively modernize the existing definitions of businesses that transmit funds on behalf of other parties, as well as outline exemptions for businesses that did not fit the standard definition of a financial institution.
The last iteration of the legislation was passed in 2001 and centered on a number of issues including the prevention of money laundering and financing of terror activity.
“For example, while current North Carolina law can clearly be read to cover certain virtual-currency-related business models, its language remains ambiguous — particularly for companies using the underlying technology for applications other than payments," Boring said. "The proposed Money Transmitter Act would not only clarify the licensure requirement as to a variety of virtual-currency-related business models, but it would also make important distinctions between companies using virtual currency (like bitcoin), and ones that use the underlying software technology (like blockchains or distributed ledgers).”
Similar money transmitting legislation is on the books in 48 other states, according to Boring. While some might say the legislation is ultimately bad for blockchain and the businesses built around it, she argues the bill helps to add clarity around the exclusions for businesses and the non-financial applications of blockchain technology.
“Some might worry that this bill is bad for the blockchain industry. After meeting extensively with the Legislature, and reviewing the text of the bill, and most importantly, the [frequently asked questions] that accompany it, we are satisfied that …North Carolina’s Legislature has taken a bigger step forward than most other states in embracing this new technology head-on,” she said.