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.
South Carolina Legislature Proposes Bill to Enact Anti-Money Laundering Act
South Carolina Representative Alan Clemmons introduced a bill proposing state regulation of money transmission services business. Titled the “South Carolina Anti-Money Laundering Act,” the proposed act is based on the Uniform Money Services Act. Under the proposed bill, virtual currencies are included in the definition of money transmission, requiring state licensure. Presently, South Carolina does not regulate money transmission services businesses.
CFTC Technology Advisory Committee Public Meeting to Address Blockchain and Distributed Ledgers
The Commodity Futures Trading Commission (CFTC) announced it will hold a public meeting on January 26th in Washington D.C. to discuss technology related issues, including blockchain and distributed ledger technology in the derivatives market. Last month Commissioner J. Christopher Giancarlo spoke enthusiastically about the potential of blockchain technology at Harvard Law School’s Fidelity Guest Lecture Series on International Finance. Calling the current “closed ledger” financial system “inefficient and unstable,” the commissioner predicts that “[d]istributed ledgers will have enormous implications for financial markets in payments, banking, securities settlement, title recording, cyber security and the process of collateral management.”
Members of the public are invited to submit written statements to the CFTC in connection with the upcoming public meeting. For more information, visit the CFTC website.
Lawmakers Submit New Draft Bill Banning Virtual Currencies to Russian Assembly
Lawmakers submitted a new draft bill to Russia’s legislative assembly, the Duma, proposing a ban on virtual currencies. The law would impose imprisonment and civil penalties ranging from $265 to $66,000 for those who violate the law. The bill prohibits “malevolent issuance of money surrogates,” which may include virtual currency miners as well as exchangers; “assistance in money surrogates circulation,” which captures virtual currency wallets; and “circulation of money surrogates,” which includes those who purchase goods and services using virtual currency. The bill goes so far as to prohibit advertisement related to virtual currencies, in both mainstream media and online, by prohibiting the “intended distribution of information sufficient and necessary for issuance of money surrogates in media and information and communications networks.” For more information, read the full article available on CoinDesk.
Executive Director of ESMA Urges Regulators to Prepare for Blockchain Technology
The European Securities and Markets Authority (ESMA) discussed blockchain and distributed ledger technology at a financial innovation event in Paris last month. Executive Director Verna Ross advised regulators to prepare for the changes to come in the financial system as a result of distributed ledger technology, emphasizing the importance of strictly regulating the space while being “careful not to curb [ ] technological innovation.”
For an overview of panel discussions at the event, visit www.esma.europa.eu.
For a comprehensive list of developments please see our Virtual Currencies: International Actions and Regulations.