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.
New Jersey. Lawmakers in New Jersey recently proposed a 30-page bill (A4478) that would create tax incentives for companies that service or exchange digital currency. The bill is aimed at promoting innovation and creating jobs in the state. According to a report by the New Jersey Star-Ledger, the proposal would, if passed, establish a regulatory framework and set in place tax breaks for New Jersey companies that work with digital currencies. The draft text of the bill is currently unavailable for public viewing on the state legislature’s website.
California. The California Department of Business Oversight (DBO) released conflicting statements on May 22 regarding how bitcoin regulation will move forward in California. The DBO stated that it had elected not to exercise its authority to regulate bitcoin and digital currencies, instead passing this determination to the state legislature but soon recanted such statements. DBO spokesperson Tom Dresslar commented that DBO has not made any decision yet. The update is the first since the DBO’s December announcement that a meeting would be held to address the topic.
- Accenture has taken the position that the UK government should regulate bitcoin wallets the same way it regulates bank accounts. In its response to the UK Treasury’s call for information on digital currencies, Accenture suggested that the UK government should reasonably and appropriately regulate digital currency wallets, because a centralized authority is needed to supervise and monitor their use. Accenture proposed the creation of an Authorized Digital Currency Wallet Institutions list, which is similar to the list of Authorized Payment Institutions. Without government intervention, Accenture believes that UK banks are unlikely to provide support to digital currency businesses, which will stifle payment innovation.
- The UK’s Conservative Party was recently re-elected, putting the UK in position to potentially become a global bitcoin hub. Along with its call for information on digital currencies, it is planning to apply anti-money laundering regulation to the digital currency exchanges in the UK, intending to support innovation and to curb criminal use. The Bank of England has taken a “cautiously optimistic” position on digital currencies. It concluded, “While existing private digital currencies have economic flaws which make them volatile, the distributed ledger technology that the payment systems rely on may have considerable promise.” The Bank outlined the potential for the government to create its own government-issued currency based on the digital currency technology. The government will formally consult on the proposed regulatory approach early in the next parliament, likely this summer.
EBA. Vincent Brennan, Chairman of the European Banking Association (EBA) suggested that banks need to understand the technology behind the blockchain, and need to explore its long-term benefits. In his interview Brennan said, “We see [the blockchain] as a technology that while relatively novel and new is one that if you look into two years, five years or 10 years, would be very important for banks and now is the time to start understanding it and looking at what its opportunities could be.” The article explains the advantages of a decentralized ledger, such as faster payments, improved banking, reduced costs, and improved product offerings. The EBA recently published a report on crypto currencies, which largely dismissed digital currencies, but acknowledged that it plans to gain a stronger understanding of crypto technology.
Australia. The Commonwealth Bank of Australia (CBA) announced this week it will use Ripple technology to facilitate payments between its subsidiaries, describing distributed protocols as “the way of the future”.