Below is a summary of some of the significant legal and regulatory actions that occurred over the past week. This alert is not intended to be a comprehensive list of all such developments, but rather a selection of publicly-reported news that may be of particular interest.

U.S. Developments

A bill (Tennessee House Bill 701) to allow political donations denominated in bitcoin has passed in the Tennessee legislature with a 61-28 vote on April 20 in the House of Representatives. It will allow candidate and political campaign committee to accept digital currency as a contribution, require increase in value of digital currency to be reported as interest on statements filed with the registry of election finance, and require candidate to sell digital currency and deposit proceeds before spending the funds. The Senate version of the bill, SB 674 was passed in late March. The bill is now goes to Tennessee Governor Bill Haslam for approval.

New York Department of Financial Services superintendent Benjamin M. Lawsky anticipates the final version of the BitLicense regulatory framework to be released before the end of May. Proposals for the BitLicense, which will regulate bitcoin business activity in New York were first released last year and have since been revised over several comment periods.

International Developments

  1. EU. The EU’s securities watchdog has issued a call for evidence to ascertain if and when blockchain technology can “enter the financial mainstream.” The European Securities and Markets Authority (ESMA), which oversees securities markets in the region has been monitoring investment in the bitcoin sector and is now asking industry stakeholders to assess its document and answer 10 questions about the types of crypto-securities and investment products in use, as well as elaborate on the associated risks and rewards for investors.
  2. Spain. The Spanish government confirmed that bitcoin is exempt from VAT based on the interpretation of EU VAT Directive 2006/112/CE, which recognizes bitcoin as “financial service.” Previously, there had been legal uncertainty around the this subject. However, this clarification shows the Spanish government’s ability to understand the challenges posed to the companies in the bitcoin space and now startups can create business plans with more transparency and with more awareness of the kinds of taxes they would be expected to pay.