Sorry, couldn’t help myself with that bad pun. The National Conference of Commissioners on Uniform State Laws, or Uniform Law Commission (ULC, visit their website) which “provides states with non-partisan, well conceived, and well drafted legislation that brings clarity and stability to critical areas of state statutory law” has a committee on the “Regulation of Virtual Currency Businesses Act.” On July 19, 2017, it released the “approved text” of a draft “approved and recommended for enactment in all the states,” the PDF which you can read here.
This recommends some very specific regulations with regards to cryptocurrencies, or “virtual currencies.” Here’s a couple of the more interesting recommendations:
SECTION 201. LICENSE. A person may not engage in virtual currency business
activity, or hold itself out as being able to engage in virtual currency business activity, with a resident unless the person is:
(1) licensed under this [act];
(2) licensed to conduct virtual currency business activity by a state with which this state
has a reciprocity agreement;
(3) a registrant operating in compliance with Section 210; or
(4) exempt from this [act] under Section 103.
And with regards to what “virtual currency” means:
“Virtual currency” means
(A) a digital representation of value that:
(1) is used as a medium of exchange, unit of account, or store of value; and
(2) is not legal tender, whether or not denominated in legal tender; and
(B) does not include:
(1) a transaction in which a merchant grants value as part of an affinity or
rewards program, which value cannot be taken from or exchanged with the merchant for legal tender, bank credit, or virtual currency; or
(2) a digital representation of value issued by or on behalf of the publisher
and used within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform.
This is the beginning of the process of controlling cryptocurrency, both in terms of license and regulation as well as constraining the exchange of cryptocurrency to essentially “play money.”
Regardless of the many voices decrying this recommendation, and regardless of China’s recent move to ban Initial Coin Offerings (ICO’s), we will most likely see laws put into place making it illegal, and therefore punishable by prison and fines (and not payable in virtual coins!) for anyone that attempts to create a cryptocurrency as a means of exchange of value, except for reward programs and games.
So if you’re one of those futurist people that thinks they can build a better, more equitable world by creating a community based on untaxed, unregulated exchange of goods and services (think organic food growers, alternative schools, natural building materials, and magical thinking healers) with your own virtual currency, think again.