By Shelly Melancon (Switzerland)
The United States has constituted a joint committee featuring the Uniform Law Commission (ULC) and the American Law Institute (ALI).
The committee aims to conclude the reforms to the Uniform Commercial Code (UCC) regarding the regulations of digital asset transactions.
Accordingly, the amendments are recommended for implementation by all 50 states across the U.S. However, each pattern of enactment may vary depending on the jurisdiction.
The U.S. Crypto Industry Braces for Reform
The final draft of the proposed committee amendments to the UCC was approved last month. Users can find the critical reforms for the crypto industry in Articles 3 and 9. Meanwhile, Article 12 also contained some key details of the new rules.
Sources privy to the content of the new development disclosed that the committee introduced a new concept named “controllable electronic records.” All blockchain-based assets, as well as future classes of digital assets, fall under the new concept.
Moreover, a controllable electronic record is defined as a record stored on any electronic platform. It also incorporates cryptocurrency and non-fungible tokens (NFT), although they are separated from the category of electronic money. Similarly, electronic money falls under the fiat-based digital currencies’ revised money category.
CBDC As Electronic Money
Following the amendment, central bank digital currency (CBDC) could be classified as electronic money. Likewise, under the latest guidelines, privately-issued crypto tokens are not in the same category as CBDC.
According to analysts at J.D. Supra, this implies a difference in the security interest in CBDC versus cryptocurrency. For CBDC, the security interest is only achieved through the lender’s control of the CBDC.
The amendment also indicates that a lender must have the borrower’s private keys for the crypto asset. This facilitates the transfer of crypto tokens to the wallet under the lender’s control. This process gives a cryptocurrency’s collateral priority over other aspects.
The United States government founded ETC in 2019, modeled on ULC. It was established to address legal issues concerning cryptocurrency, NFT, and other innovative digital assets. The UCC is a model law adopted by all territories within the U.S. to facilitate interstate transactions.
As a result, all the states in the United States will accept and implement the changes without exception.
U.S. Crypto Guidelines
The United States, like other countries, has a structured crypto ecosystem but lacks comprehensive regulations. Concerning regulations, much success has been recorded at the federal and state levels.
Furthermore, the country’s Financial Crimes Enforcement Network ((FinCEN) does not consider crypto legal tender. However, the agency sees crypto exchanges as money transmitters because crypto tokens represent value.
The Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) combined with the Department of Justice to oversee the activities of the crypto ecosystem.
There have been successes in regulating the crypto space, but more guidelines are needed to manage the industry as it evolves.
Regulating the crypto industry is complex; no country has achieved 100% in this area. However, the U.S. is one of the few to have made a stride.
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