At present, no federal charter protocols are available to cryptocurrency traders (miners and exchanges) however MANY states have taken the initiative to regulate this activity. At this point it is safe to assume that a money transmitter bond and license will be required regardless of which state in which a miner or crypto-exchange operates as the very nature of interstate/international commerce will inevitably bring the operator in to contact with consumers in those states where there is a current legal framework. Per Francine McKenna with Marketwatch, there have been notable developments of which miners should be aware.
"Securities and Exchange Commission ~ On July 25, 2017, the SEC issued an investor bulletin about initial coin offerings, saying they can be "fair and lawful investment opportunities" but can be used improperly. The SEC has issued three enforcement actions against ICO sponsors- one halt and exposure of two alleged frauds. SEC Chairman Clayton has also expressed concern about market participants who extend to customers credit in U.S.
Commodity Futures Trading Commission ~ The CFTC allowed the CME and CBOE to launch bitcoin futures. CFTC also approved a platform for the trading and clearing of virtual currency derivatives for LedgerX, LLC, a swap execution facility and derivatives clearing organization.
States ~ Several U.S. states plan to approve the acceptance or promotion of the use of bitcoin and blockchain technology, while some have already passed them into law according to Bitcoin magazine, including Arizona (recognition of smart contracts), Vermont (blockchain as evidence) and Delaware (pending initiative authorizing registration of shares of Delaware companies in blockchain form)."
Currently there are six states that treat crypto traders as money transmitters. These states require licensing and deposit of a cryptocurrency money transmitter bond:
*Clicking on the individual states above will take you to the corresponding regulator. On those entities web pages you will find application instructions and information about money transmitter bond requirements for your particular operation.
The Uniform Law Commission (ULC) has drawn a uniform model law for the regulation of virtual currency businesses. Per the ULC, "The Uniform Regulation of Virtual-Currency Businesses Act (URVCBA) creates a statutory framework for regulating virtual currency business activity, which includes businesses engaged in the exchange of virtual currencies for cash, bank deposits, or other virtual currencies; the transfers of virtual currency between customers; and certain custodial or fiduciary services. Under the Act, "virtual currency" is a digital representation of value that is used as a medium of exchange, unit of account, or store of value and is not legal tender. This technology-neutral definition covers as many types of virtual currency as possible. The URVCBA's unique, three-tiered structure clarifies whether an individual or company engaging in virtual currency business activity is (1) exempt from the act; (2) must register; or (3) must obtain a license. The URVCBA also contains numerous consumer protections." A review of the ULC's findings and the Act can be helpful to understanding current state requirements and anticipating future ones.
International surety bond leader, Surety One, Inc. specializes in the bonding needs financial institutions, money transmitters and cryptocurrenty specialists . We offer surety bonds and fidelity bonds to financial services operators and traders in all fifty states, Puerto Rico and U.S. Virgin Islands. Although applicant financial condition is a factor in bond underwriting, we have programs to fit EVERY credit condition. Call (800) 373-2804, email us at Underwriting@SuretyOne.com or click here for a live chat for a cryptocurrency surety bond (money transmitter bond) application or to discuss your particular needs.
Surety bond application review and quoting are free of charge. There is no obligation to purchase.