Earlier this month, North Carolina’s governor signed into law an updated Money Transmitters Act (MTA), which seeks to clarify the rules for digital currency. The updated MTA defines what North Carolina considers “monetary value” in the age of emerging technologies in the financial sector. The MTA now defines monetary value as “a medium of exchange, whether or not redeemable in money.” These changes came on the heels of the North Carolina Office of the Commissioner of Bank’s (NCOCB) guidance issued late last year. The NCCOB’s guidance recommended carving out regulatory exemptions for select bitcoin and blockchain businesses. Blockchain technology, also known as distributed leger technology, was born out of the operational platform behind bitcoin transactions and, according to many technology companies, is the future of the financial services sector. Blockchain is touted as an emerging technology that can provide a transparent way to digitally track the ownership of assets, speed up transactions, facilitate secure payment processing, and electronically initiate and enforce contracts. Representatives of the blockchain industry, including the Chamber of Digital Commerce, touted North Carolina’s legislation as a comprehensive and business-friendly regulation.
Despite North Carolina’s clarification under the MTA, the future of blockchain and virtual currency regulation remains obscure. While the transmission of virtual currency is regulated under the North Carolina MTA, the use of virtual currency is not regulated. For example, a merchant that accepts virtual currency as payment for goods or services is a “user” under the MTA and does not require a license. Likewise, a virtual currency administrator, who issues or redeems virtual currency, does not require a license under the MTA; however, administrators must still register with FinCEN and comply with the Bank Secrecy Act.
Blockchain, digital currency, and the technology behind it, are becoming an increasingly popular area of investment and innovation within the financial services sector. As the use of blockchain increases, so too will regulation to keep up with the changing landscape. More than ever, businesses who utilize blockchain technology or digital currency are poised to keep a watchful eye on how other states and federal entities legislate this growing intersection between finance and technology.