In the United States, both federal and states laws classify cryptocurrencies at various levels. While many states are friendly to the new industry, others are not that comfortable with its citizens investing in an unregulated financial sector.
Texas, which is thought to be one of the friendly states towards the blockchain companies, is now seeing stablecoins as “money” under the Texas Department of Banking’s updated guidelines and might require a license for issuing the same.
Stablecoins are dollar-pegged coins, which mean for every issued digital coin, the issuer needs to put a dollar in its currency chest. This industry became very lucrative and flourished as most of the crypto exchanges including the major ones are making these stablecoins as their base currency for crypto trading to ignore the heavy restrictions involved with fiat-based trading.
The memo published by Charles Cooper, commissioner of Texas Banking, details how federal and state laws, should see the digital coins emphasizing the assessment of fiat-backed stablecoins.
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“A licensing analysis will turn on whether the stablecoin provides the holder with a redemption right for sovereign currency thus creating a claim that can be converted into money or monetary value. This is true regardless whether the redemption right is expressly granted or implied by the issuer,” the memo stated.
Crypto is Not Money
This recent memo is an updated version of the one issued in 2014. Cooper then declared that the state of Texas does not consider cryptocurrencies as “money” and any exchange of cryptocurrencies for fiat does not fall under “currency exchange.” This allowed the crypto exchanges to operate from the state without acquiring any license to conduct currency transactions.
“However, when a cryptocurrency transaction does include sovereign currency, it may be money transmission depending on how the sovereign currency is handled. A licensing analysis will be based on the handling of the sovereign currency,” the updated memo further noted.
A Crypto Hub
The liberal laws in the lone star state have gained the attention of many international players willing to enter the US market. Last year, Finance Magnates reported that the crypto mining giant Bitmain is planning to open a new data center in Rockdale, a small town in the state.