Bitcoin Regulation Underway in Connecticut

By May 13, 2015Bitcoin Business
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Bitcoin Regulation Underway in Connecticut

A draft of  bill concerning bitcoin regulation has been passed by the Connecticut House of Representatives and is pending Senate approval. Once implemented, this bill would allow the state’s top financial regulator to oversee activities in the cryptocurrency industry.

In particular, Substitute House Bill No. 6800 would require companies to specify that it plans to offer bitcoin services upon seeking a money transmission license from the Connecticut Banking Department. Financial regulators in the state can then decide whether or not to grant the license based on potential risks these bitcoin transactions may pose.

Bitcoin Regulation Terms

The bill was passed by the House earlier this week and is waiting for the signature of Connecticut Governor Dannel P Malloy. Apart from bitcoin regulation, the bill would also cover laws concerning payday loans, mortgages, and consumer credit reporting.

“The bill allows the commissioner to place additional requirements, restrictions, or conditions on the license of an applicant involved with virtual currency,” the bill indicated. “For applicants and licensees who will or may engage in the business of transmitting monetary value in the form of virtual currency, such bond shall be in a principal sum as determined by the commissioner and shall be calculated reasonably to address the current and prospective volatility of the market in such currency or currencies.”

Under this legislation, digital currencies can comprise those that are centralized or decentralized in nature as long as they are digital units of exchange. However, units that are used for gambling or consumer reward are not covered.

For startup companies, this bitcoin regulation might prove to be a costly hurdle, as it would require license applicants to pay a bond to the state before engaging in digital currency activities. This amount would be determined by the commissioner based on the potential price fluctuations in the market of that particular digital currency.

In particular,  Substitute House Bill No. 6800  would require companies to specify that it plans to offer bitcoin services upon seeking a money transmission license from the Connecticut Banking Department. Financial regulators in the state can […]

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