State legislators recently approved a bill that updates regulations for money services businesses, such as Western Union, and includes requirements for virtual currency, or cryptocurrency, businesses, said Carol Goforth, professor at the University of Arkansas School of Law.
Senate Bill 150, which has been signed into law by Gov. Asa Hutchison, was introduced by Sen. Jonathan Dismang, R-Beebe, and co-sponsored by Rep. John Maddox, R-Mena. It amends the Uniform Money Services Act to include those engaged in the business of transferring virtual currency from one customer to someone else, Goforth said. The cryptocurrency expert has studied the subject for the past five years and is the author of multiple publications on it.
The bill that’s now Act 532 requires virtual currency businesses to meet state reporting requirements like traditional money services businesses do, she said.
“What this is doing is modernizing and equalizing the money services requirement,” Goforth added. “The major players like Coinbase are going to be not surprised by this. They’re going to be all ready to register if they haven’t registered already.”
Goforth noted the bill avoided issues of another state bill that required the businesses to have virtual currency and highly-rated traditional assets.
“We fixed that, and there’s a specific provision in the bill that says if it’s a virtual currency business, the value of assets that you have to have can include, instead of the conventional assets, virtual assets that you’re taking for your clients,” she said. “The big potential problem that I specifically looked for, this bill avoids.
“It looks like a well-drafted update to our money services act that puts virtual currency businesses on a level playing field with conventional money services businesses.”
Other updates in the bill require money services businesses to provide adequate cybersecurity and meet disclosure obligations for people who own or are acting on behalf of the business.