Digital Currency Weekly Recap 7-3-2016
China’s Civil Code Could Be Changing to Reflect New Attitude Toward Cryptocurrency
For some time, China has been cautious in its response to digital currencies – partly due to worries about how currencies like Bitcoin might impact the yuan. Now, as organizations within the world’s most populous nation are banding together to explore the benefits of technologies like the blockchain, the Asian giant has taken its first tentative steps toward adopting a more hands-on approach to dealing with cryptocurrency issues. This week saw the introduction of a draft version of the Chinese civil code that would, if implemented, declare all digital networks and data to be property on the level of financial and physical assets. That single change would provide those digital assets the same types of property rights afforded to other assets in China.
This, along with recent indications that the People’s Bank of China has decided that it has nothing to fear from digital currencies, should be a positive step for FinTech development throughout the Chinese nation. And while some are hesitant to get too enthused about the new draft code – suggesting that the proposed law does not actually refer specifically to digital currencies in its language, China’s government has not yet denied that the protections would apply to cryptocurrencies.
North Carolina’s Senate Amends Money Transmitter Act to Include Cryptocurrency
Earlier this week, the North Carolina Senate passed an amendment to the existing law governing Money Transmitters that would extend that Act so that it applies to digital currencies as well. As a result of this move, digital currency exchanges that want to operate in the state would have to first be licensed as money transmitters - a process that costs $1,500 for the initial application and a $5,000 for an annual assessment. The bill still has to be considered by the state’s governor before it can become law.
Justice Department Official Urges Cryptocurrency Regulation
It should come as a surprise to no one that one of the Justice Department’s top law enforcement officials has come out in favor of strong regulation on digital currencies. According to John Carlin, the Assistant Attorney General in charge of the Department of Justice’s National Security Division, digital currencies need to be regulated for much the same reason strong currency regulations were put into place for fiat national currencies like the dollar: to thwart those who would use digital currency to deal drugs, commit acts of terror, or perpetrate other crimes. In remarks to attendees at the Center for Strategic and International Studies, Carlin noted that,
“"Just as we did with currency ... we put in different regulations and reporting requirements that made it harder for those who would do bad things to take advantage of our financial system."
Citi Report Claims Bitcoin is Potential Complement for Banking Services, Not a Threat
Citi Research has produced a new report that suggests that digital currencies may not be the disruptive force that so many banks and other finance companies believe them to be. Rather, the report argues that these new technologies should be explored as possible complements to the financial services industry’s existing offerings, since cryptocurrencies have demonstrated that they are more effective at reaching and servicing new customer markets and areas of the marketplace that are currently underserviced by modern banking interests.
In spite of that recognition, the report also took issue with some of the most common claims made by Bitcoin enthusiasts. Its authors suggested that the currency’s current low transaction fee model could not be sustained over time, and that those fees would eventually be more expensive than other centralized networks. The report also questioned digital currency’s claimed advantages in speed and scalability.