5 US States Poised to Promote Bitcoin-Friendly Regulation
Given the recent critiques of New York and its proposed framework for bitcoin businesses, many of the law's opponents are no doubt hoping the state and its regulators will alter the bill during its now extended comment period.
After all, New York's BitLicense proposal, once approved, could prove influential at shaping wider US bitcoin regulation, a fact recently underscored by New York Department of Financial Services (NYDFS) superintendent Ben Lawsky in an interview with CoinDesk.
Of course, while vocal opponents of the bill and its controversial provisions await more guidance, there remains the possibility that another US state will introduce a framework that proves more enticing to the bitcoin industry and its interests.
The ability for states to regulate and pass laws is what makes America unique in many ways. So it should not come as a surprise that some US states could see the backlash against New York's proposal as an opportunity to position their jurisdictions as more accepting of digital currencies and the jobs and investment the industry can attract.
In this piece, CoinDesk takes a look at some of the US states that could be poised to pursue such a path.
Owing to its former status as a sovereign nation, Texas has a long history of independence, a trait that its lawmakers and citizens alike take pride in. Texas operates its own electrical grid, has no income tax and has introduced a favorable regulatory framework for bitcoin exchanges.
As such, it should come as no surprise that the state has produced vocal bitcoin advocates.
For example, Steve Stockman, a US Representative for the 36th Congressional District of Texas, has indicated in the past that he favors the bitcoin industry as a way to create jobs in his home state.
In line with his beliefs, Stockman will reportedly introduce a bill to change bitcoin’s status from property, as is currently used for IRS reporting, to currency, a distinction long lobbied for by the bitcoin industry.
Outside of Stockman's efforts, however, Texas also has in the past courted technology companies like Amazon seeking to avoid charging sales taxes on customers – an example of favorable treatment for digital businesses.
New Mexico is already known as a state where bitcoin businesses can get things done. The state’s Financial Institutions Division does not license or regulate money transmitters, making it a friendly place for digital currency-related ventures.
That’s the primary reason why the first bitcoin ATM in the US was launched there, as its operator was easily able to comply with state laws.
Despite the lax regulatory environment in New Mexico, the state’s Regulation and Licensing Department did put out an alert regarding the risks of virtual currencies.
Yet, the regulatory body indicated it was “evaluating the developing market for bitcoin and other forms of virtual currency”, according to Alan Wilson, Director of the New Mexico Securities Division.
The tiny New England state of New Hampshire takes its state rights seriously, a fact evidenced by its not-so-subtle state motto – “Live Free or Die”.
This has led to growing support for the state's bitcoin movement. Andrew Hemingway, a Republican candidate for governor has notably embraced bitcoin as part of a libertarian-leaning campaign stance, parlaying his policies to gain new followers in the process.
He says that the weekly New Hampshire bitcoin meetup regularly attracts 50-60 people every session – folks who believe that cryptocurrencies are aligned with libertarian ideals.
Further, Hemingway makes it clear he wants to attract bitcoin businesses, telling CoinDesk:
“Companies are being regulated out of business, so they are looking for places to move. A state like New Hampshire, for instance, has the right to compete against a state like New York.”
As far as bitcoin is concerned, California is the capital of digital currency in the US. It’s no wonder, then, that the state is attempting to build the right framework – in a cautious way – to help influence innovation, a hallmark of the state.
There’s a lot at stake – California leads the way in bitcoin-related jobs, housing a majority of the industry's engineering and technology-driven talent.
David Kaufman, a consultant with Capital Advisors who helped to usher in California’s HN 8129 bill acknowledging virtual currency as legal money within the state, told CoinDesk that it is expected the state legislature will adopt “friendly regulations down the road”.
That’s a major reversal from just a year ago, when California sent the Bitcoin Foundation a cease-and-desist letter for violating various financial codes.
Since then, California has led the way in bitcon-related venture capital investment. According to the most recent CoinDesk State of Bitcoin Report, 48% of all bitcoin related VC went to Silicon Valley startups in the second quarter of 2014.
As the first state to legalize marijuana, Colorado’s interest in adopting virtual currencies is twofold. For one, the state has seen an uptick in its government coffers as a result of being the first to adopt a regulated and taxed marijuana economy.
Additionally, the state's economy has struggled to get along with the traditional banking sector – it seems accounts could be closed for no reason, at any time.
If there’s one thing that distributed money like bitcoin can accomplish, it is a better transport and transaction mechanism over cash – something marijuana dispensaries which cannot get bank accounts must conduct all their business in.
Alternative currency efforts such as Potcoin have been developed specifically for the used of marijuana ventures. Innovations such as vending machines accepting bitcoin for marijuana are also novel ideas that can reduce overhead as well as thwart potential security concerns with human handling of both pot and cash at the same time.
Of course, major bitcoin payment processors have stated that they will not do business with companies that violate federal law, meaning should Colorado move to embrace bitcoin, this industry may still face problems promoting wider digital currency adoption.
What states do you expect to promote relaxed bitcoin regulations? Weigh in below.
States of the US image via Shutterstock
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