Texas Department of Banking Issues Guidelines on Virtual Currency
The Texas Department of Banking, a state agency whose mandate is to ensure that Texas "has a safe, sound and competitive financial services system", has put out a Supervisory Memorandum which "expresses the Department's interpretation of the Texas Money Services Act 1 and the application of its interpretation to various activities involving virtual currencies."
The document, after giving a well-written overview on virtual currency, then makes its first analysis with regards to currency Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term. Because it isn't issued by a government, operating a virtual exchange service does not require a license as would be required by the appropriate statute under the Texas Finance Code for regular currencies. This may soon differ with New York which may soon require a "Bitlicense" for such.
The same applies to money transmission licensing. Virtual currencies do not constitute "money or monetary value" as no government has any obligation to honor them, for example, in the "payment of all debts, public charges, taxes, and dues".
However, when a sovereign currency is involved in some way, it may be considered money transmission depending on how it's handled: The exchange of cryptocurrency for fiat between two parties is not transmission, rather the sale of goods. Certainly, exchange of two different Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term and the transfer of stand-alone cryptocurrency are not considered money transmission.
However, a third party facilitating the exchange of cryptocurrency for fiat is deemed to be transmitting money. If facilitated through an ATM, it is usually considered money transmission if connecting buyer and seller through an exchange. If however, the trade is made between the operator and the client without engaging a third party, then it is not money transmission.
If considered money transmission and the business operates through the internet, then its minimum net worth must be at least $500,000, which may increase to $1,000,000 in the future. A third-party audit of all relevant computer systems is also required.
The Texas Department of Banking, a state agency whose mandate is to ensure that Texas "has a safe, sound and competitive financial services system", has put out a Supervisory Memorandum which "expresses the Department's interpretation of the Texas Money Services Act 1 and the application of its interpretation to various activities involving virtual currencies."
The document, after giving a well-written overview on virtual currency, then makes its first analysis with regards to currency Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term. Because it isn't issued by a government, operating a virtual exchange service does not require a license as would be required by the appropriate statute under the Texas Finance Code for regular currencies. This may soon differ with New York which may soon require a "Bitlicense" for such.
The same applies to money transmission licensing. Virtual currencies do not constitute "money or monetary value" as no government has any obligation to honor them, for example, in the "payment of all debts, public charges, taxes, and dues".
However, when a sovereign currency is involved in some way, it may be considered money transmission depending on how it's handled: The exchange of cryptocurrency for fiat between two parties is not transmission, rather the sale of goods. Certainly, exchange of two different Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term and the transfer of stand-alone cryptocurrency are not considered money transmission.
However, a third party facilitating the exchange of cryptocurrency for fiat is deemed to be transmitting money. If facilitated through an ATM, it is usually considered money transmission if connecting buyer and seller through an exchange. If however, the trade is made between the operator and the client without engaging a third party, then it is not money transmission.
If considered money transmission and the business operates through the internet, then its minimum net worth must be at least $500,000, which may increase to $1,000,000 in the future. A third-party audit of all relevant computer systems is also required.