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North Carolina Senate Committee Supports Bill to Regulate Bitcoin, Coin Center Responds with Feedback

Op-ed - North Carolina Senate Committee Supports Bill to Regulate Bitcoin

The North Carolina Senate Commerce Committee has agreed to support a House Bill drafted by North Carolina’s banking commissioner regarding money transmission.

The bill, titled “AN ACT TO ENACT THE NORTH CAROLINA MONEY TRANSMITTERS ACT AS 3 REQUESTED BY THE OFFICE OF THE NORTH CAROLINA COMMISSIONER OF 4 BANKS,” states that money transmission includes maintaining control of virtual currency on behalf of others, and that the “online-only money” [bitcoin] is converted to cash using digital currency exchanges and the holder keeps it stored online.

The bill passed the House back in May and is in the process of being approved by another panel of senators.

Some senators have agreed to support the bill and to give officials of North Carolina tools to regulate and set restrictions for bitcoin and other digital currencies. The support derives from their concern toward digital currencies, and how they are not backed by a government or a centralized entity.

Some senators just wanted to “ensure transactions are performed” and to license bitcoin and digital currency exchanges.

Although a 2001 law gives the state the authority to regulate digital currencies, the commissioner’s office wanted a more modernized set of rules.

The new update on North Carolina’s regulations and the bill that is soon to be approved by another panel of senators has already been updated on Coin Center’s public State Digital Currency Regulation Tracker, which points out several issues including:

  1. Money Transmission is defined to include: maintaining control of virtual currency on behalf of others.
  2. Has only an exemption for agents of licensees.
  3. No ramp-up period for startups

Peter Van Valkenburgh, Director of Research at Coin Center, told Bitcoin Magazine, “We’re happy to see that the law doesn’t create a disparate regime as between bitcoin and traditional money transmission, that it has no state-specific AML/KYC requirements unlike New York’s BitLicense. We’re also happy that virtual currency is a permissible investment for the minimum capital requirement. What we’d like to see improved is the language that determines which activities need to be licensed. Right now it says maintaining control of virtual currency. That’s the right approach but we’d love a definition of control that clearly exempts multi-sig and software wallet providers. Control should be defined as ‘the ability to unilaterally execute or prevent a virtual currency transaction.’ We’d also like to see formal exemptions for software, mining, and uses of blockchains for purposes other than money transmission.”