itBit’s Global Digital Currency Regulatory Roundup: March 2015

Exploring and understanding the uses of digital currency was a key theme around the globe in March. Finding ways to fit digital currency under the umbrella of existing laws and regulations, particularly with respect to anti-money laundering efforts, was also a major push seen in several countries.

Every month,  itBit, a global exchange offering institutional and retail investors a powerful platform to buy and sell bitcoin scours the globe to bring the latest in digital currency regulation news. Chief Compliance Officer, Erik Wilgenhof Plante, highlights key regulations and legislation impacting retail and institutional digital currency investors worldwide. You can read the latest March roundup below…

North America

California: Bill proposes license requirement for bitcoin businesses

A bill introduced in the California legislature would prevent digital currency businesses from operating in the state unless they have been licensed by the Department of Business Oversight and received an exemption.

The bill comes from Assemblyman Matt Dababneh, chairman of the California Banking and Finance Committee. A spokesman for the assemblyman told CoinDesk, “This bill is something that has been in the works in the state for a couple of years, and as the leader of that committee, Matt dedicated himself on the issue and thought it was the right move to make for the state of California at this time.”

Licensing requires businesses to pay a non-refundable $5,000 for registration and also ask companies to hold a certain portion of their funds in “investment-grade permissible investments.”

Asia

Hong Kong: Official says legislation not needed for bitcoin regulation

Secretary for Financial Services & the Treasury Prof KC Chan said that because bitcoins are not widely used in Hong Kong, legislation that would ban or regulate virtual commodities from trading remains unnecessary.

In his statements, Chan reiterated that such currencies were speculative, and thus posed a risk to users. He also noted that his office would keep a watchful eye on digital currencies and said that, should the need arise, regulators could utilize existing laws to deal with issues of fraud or crime related to digital currencies.

Europe

U.K.: Report on digital currency regulation released

treasuryThe U.K. Treasury Department released a report about digital currencies in March, which outlined current views on digital currency and noted potential regulatory actions. According to the report, “The government considers that digital currencies represent an interesting development in payments technology.” The report also goes on to say that such currencies could have advantages for micro-payments and cross-border transactions.

The document also relays plans to apply Anti-Money Laundering laws to digital currencies. The government would seek comment on the potential action, and its impact, later this year.

Isle of Man: Regulation for digital currency introduced

Starting on April 1st, 2015, digital currencies operating in the Isle of Man will be subject to the country’s AML laws after the government amended the 2008 Proceeds of Crime Act to cover bitcoin companies.

According to CoinDesk, that means that those operating in the digital currency business will have to adopt certain know-your-customer (KYC) practices. This includes collecting ID information, which would be given to the authorities if money-laundering activity is suspected.

The country is also set to amend the Designated Businesses (Registration and Oversight) Bill 2014, which would subject digital currencies to required registration and oversight by the Isle of Man Financial Services Commission.

Around the Globe…

FATF takes a pragmatic view on Bitcoin: The Financial Action Task Force has indicated that banks should take a risk-based approach when it comes to opening bank accounts for Bitcoin companies. The regulatory think tank has warned of the risk of virtual currency in the past.

The FATF has published a report that establishes a conceptual framework of key definitions to form the basis for further policy development.

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