The Texas Department of Banking has released a supervisory memorandum outlining its regulatory stance on digital currencies within the guidelines set by the Texas Money Services Act.
The document draws a line of distinction between bitcoins and other digital currencies and sovereign currencies like the dollar. According to the memorandum, digital currencies are not recognized as legal tender in Texas because they lack backing from an institution like a central bank, do not have intrinsic value and do not carry any guarantees of redemption.
Overall, the statements clarify the statutes which govern the establishment of third-party bitcoin exchanges that handle sovereign currencies, providing a clearer path for those who might seek licensure in Texas.
As a result, the exchange of digital currency and sovereign currency does not qualify as a money transmission:
The memorandum likens the purchase or sale of bitcoins or other digital currencies to a transaction involving a commodity or product, stating:
The memorandum notably follows the 11th March news that New York would accept applications for bitcoin exchanges, and suggests that more states may be following its lead.
Implications for exchanges
Daniel Wood, assistant general counsel for the Texas Department of Banking, explained in an interview with CoinDesk that the regulations focus primarily on businesses that operate exchanges and handle sovereign currencies.
"Our statutes define money and currency very narrowly," he added.
, co-founder and treasurer of the Texas Bitcoin Association, said in an interview he sees the clarification of money transmission rules as a way to better govern the behavior of third-party exchanges.
He went on to state that he thinks of the rule clarification as one part of a broader regulatory evolution in regards to digital currencies, both in Texas and beyond.
US regulation taking shape
Exchanges based in China are also beginning to feel pressure from state regulators, though in a more negative way.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.