Last week, the Conference of State Bank Supervisors (CSBS) and the North American Securities Administrators Association (NASAA) released model consumer guidance that they jointly developed to assist state regulatory agencies in providing consumers with information about virtual currency and factors consumers should consider when transacting with or investing in virtual currency.  Within days of the model guidance release, the Maryland Commissioner of Financial Regulation and the Nevada Department of Business and Industry both issued their own Advisories.  The Maryland advisory notice adds a statement that Maryland does not currently regulate virtual currencies.  Given the breadth of Maryland’s money transmitter statute, Maryland likely has the authority to regulate virtual currencies without any amendments to its laws, but appears to have decided to take a “wait-and-see” approach for now.  The Nevada guidance adopts the CSBS model advisory language verbatim with only insubstantial changes in the introductory language, and does not comment on whether current Nevada law covers virtual currency.
Continue Reading CSBS Model Virtual Currency Advisory: DO YOUR HOMEWORK! Maryland and Nevada Release Their Own Similar Advisories

The Washington State Department of Financial Institutions (“DFI”) issued a consumer alert warning of the risks of holding virtual currencies for investment or as a currency.  The Washington DFI specifically called out virtual currency’s volatility, lack of backing or guarantee, connection to criminal activity and potential tax repercussions.  This warning is the Washington DFI’s second announcement on virtual currencies following its earlier determination that it interprets Washington law to include digital or virtual currency in the definition of “money” in the Uniform Money Services Act, chapter 19.23 RCW.  The DFI also recently revised certain regulations to require all authorized delegates of licensed money transmitters to have a physical presence in Washington unless the licensed money transmitter received prior approval for an out of state licensed delegate.  This revision effectively requires all internet-based companies, including virtual currency firms, to obtain prior approval before acting as an authorized delegate for a licensed money transmitter.
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On March 11, the New York State Department of Financial Services issued an Order announcing that that it “will consider formal proposals and applications in connection with the establishment of regulated virtual currency exchanges operating in New York.”  While the Order itself is silent on timing, an accompanying press release makes clear that the NYDFS will begin accepting applications from exchanges “immediately.”  The press release also makes clear that while exchanges can begin submitting applications at any time, approved applicants will ultimately be required to adhere to the proposed “BitLicense” regulatory framework, which the NYDFS promised would be announced no later than the end of the second quarter of 2014.
Continue Reading New York BitLicense Order