North Carolina Gov. Pat McCrory has signed a law that defines “virtual currency” and clarifies what activity triggers licensure. The Chamber of Digital Commerce views the measure as a historical moment for state regulation of virtual currencies and blockchain technology.
The ratification of the bill, also known as the North Carolina Money Transmitter Act, follows 16 months of deliberations between the chamber, the state’s General Assembly and the North Carolina Commissioner of Banks.
The General Assembly approved the bill last month, CCN reported.
Law Defines ‘Virtual Currency’
The law updates the existing laws to define the term “virtual currency” and the activities that trigger licensure. Virtual currency miners and blockchain software providers will not require a license for multi-signature software, smart contract platforms, smart property, colored coins, and non-hosted, non-custodial wallets.
Dax Hansen, chair of the chamber’s state working group and a partner at Perkins Coie LLP, said centralized cryptocurrencies pose a challenge to regulators and law enforcement officials in determining how to integrate them into the existing legal fabric. “North Carolina should be commended for investing the requisite time to understand decentralized cryptocurrencies and thoughtfully addressing them in the updated Money Transmission Act,” he said.
The chamber believes North Carolina took a business friendly approach that encourages companies to use blockchain technology and virtual currency, an approach that will bring technology companies back to the state. The North Carolina action contrasts with New York State’s separate licensing regime. As such, it provides a good direction for other states that are considering regulations.
Chamber Worked With Stakeholders
Perianne Boring, the chamber’s founder and president, noted it’s been a long process to secure the law, but it benefits both consumers and businesses in the state.
“North Carolina anticipated key issues, and developed a reasonable solution to address each concern,” Boring said. “This has paved the way for other states to realize and embrace the incredible potential of these technologies.”
The chamber is working with several other states, the Conference of State Supervisors and the Uniform Law Commission, in developing approaches to blockchain technology and virtual currencies.
Guidance For Other States
Carla L. Reyes, a Bruce R. Jacobs Visiting Assistant Professor of Law at Stetson University College of Law, said North Carolina’s action is important since it demonstrates a commitment to understanding emerging technology and providing activity-based, thoughtful regulation of business models using such technologies.
“Such careful consideration of the issues and the technology by regulators and legislatures is important for protecting the dual public policy interests of industry innovation and consumer protection,” Reyes said.
The state’s Money Transmissions Act was one of the chamber’s state working group’s key initiatives. The working group includes more than 20 member companies and six law firms.
The chamber noted the contributions of Amy Kim of Buckley Sandler, Carla Reyes of Stetson University College of Law, Joseph Cutler of Perkins Coie, Dax Hansen of Perkins Coie (chair of the state working group), Arika Pierce of Gide, and Dan Spuller of Cryptolina.
“We applaud the North Carolina Commissioner of Banks for their thoughtful engagement and approach towards making this bill a reality,” Boring said.
Image from Shutterstock and the North Carolina Governor’s office.