Saad Ullah
Fiat Backed.
The new guidance comes from a memo published by Charles Cooper, the Texas Banking Commissioner. In the memo, he outlined how cryptocurrencies should be treated under the state laws, especially stablecoins that are based on local and other currencies.
The memo builds upon a previous one, published back in 2014, in which cryptocurrency based companies were guided on how to work under the newly formed asset class. The new memo still does not consider cryptocurrencies as any form of legal tender or money, but this time, stablecoins have been singled out as falling under the definition of one.
The memo also points out that since stablecoins are fiat backed, the possessor of the coins holds a claim to the backed currency in exchange for the tokens itself. According to Cooper, this is “because the issuer has taken on the obligation to provide sovereign currency in exchange for the stablecoin at a later time.”
Compliance Warning
Cryptocurrencies, since not being recognized as a form of currency, are not subject to traditional laws and regulations and the State of Texas does not require operators to register. This holds true for even crypto to crypto exchange services since no money is being transmitted. Yet, “because a sovereign-backed stablecoin may be considered money or monetary value under the Money Services Act, receiving it in exchange for a promise to make it available at a later time or different location may be money transmission.” The Banking Commissioner has warned that stablecoin issuers will need to register with the state in order to run their operations.
Texas is perhaps one of the most crypto friendly states in the U.S. This has to do more with it not recognizing decentralized tokens as currencies and does not have any regulation laws to govern them.
Saad Ullah
