There is less than one week left to comment on the Conference of State Bank Supervisors (CSBS)’ draft model regulatory framework for state virtual currency regimes.
The draft framework, published on December 16 with a 60 day comment period, is a product of the CSBS Emerging Payments Task Force, formed to examine the intersection between state supervision and payments developments, as well as identify areas for consistent regulatory approaches among states. Along with the draft framework, the CSBS published 19 questions for public comment ranging from the licensing process, to technical innovations, to escheatment.Comments are due February 16.
Specifically, the task force recommended that activities involving third-party control of virtual currency, including for the purposes of transmitting, exchanging, holding or otherwise controlling virtual currency, should be subject to state licensure and supervision. Its model framework was designed to remain sufficiently flexible to adapt to the nascent and evolving nature of virtual currency technology and business models. The draft framework outlines broad requirements for states to follow when drafting their own virtual currency regulation, including:
- Licensing requirements with credentials for business owners and key personnel, as well as details on the banking arrangements for the business;
- Licensing systems that allow states to share data in real time;
- Financial strength and stability requirements, such as net worth and capital requirements, surety bonds, and disaster recovery plans;
- Consumer protections such as a reserve amount of virtual currency held in trust, insurance coverage, and public disclosure of licensing information;
- A cyber security program; and
- BSA/AML compliance.
The state level remains a patchwork of often conflicting regulations, interpretations and open questions, delaying any national virtual currency business plan implementations. The CSBS model framework is the first major attempt to standardize the approach to virtual currencies.
More information may be found here.