Texas is home to everything. It’s no surprise Texas is attempting to be America’s next Bitcoin hotspot.
Recently, Texas passed two laws that allow cryptocurrencies to be recognized in state commercial law. After being signed by Governor Greg Abbott in June, Texas House Bills 4474 & 1576 went into effect on September 1. H.B. H.B. 1576 created a Texas blockchain working group. H.B. The complete framework of 4474 is provided to show that virtual currency can have a place in Texas law.
H.B. 4474 adopted the Uniform Law Commission’s proposed Uniform Commercial Code (or UCC) language. UCC Article 12 will be finalized next year. However, states have the right to adopt the language as is, as shown by Texas’ H.B. 4474. Hunton Andrews Kurth associate Patrick Boot told Cointelegraph the text of H.B. 4474 clearly points out three things:
It defines virtual currency and explains how to control it or how to qualify as a purchaser. It also demonstrates how to create a security interest. This is extremely helpful when doing business with virtual currencies.
H.B. To put the importance of H.B. 4474 in perspective, Joseph Kelly, CEO at Unchained Capital, a Bitcoin financial service company based out of Austin, told Cointelegraph that Unchained Capital and their clients now have greater legal security around activities like buying Bitcoin or using it as collateral for loans.
Before H.B. Kelly stated that Bitcoin was too different and new, noting that the laws that were in place before H.B. 4474 weren’t suitable for Bitcoin transactions. Kelly explained that the unclear definitions and uncertain judicial treatment of Bitcoin pose unnecessary risks to all parties. Kelly said that states that take too long to provide clarity like H.B. 4474 put their consumers and businesses at high risk of disputes and possible loss of funds.
This clarifies the legal status of digital assets in commercial law. However, it is important to note that Texas wasn’t the first state to adopt such legislation. Caitlin LONG, a Wyoming-based crypto proponent told Cointelegraph previously that Texas was the fourth U.S. state which has defined virtual currency. This is in addition to Wyoming, Rhode Island, and Nebraska.
From legislation to a constitution amendment
Texas seems to be following the lead of other innovative states. However, members of Texas Blockchain Council — an industry organization that advocates for blockchain-centric policy initiatives — revealed that Texas has bigger plans.
Lee Bratcher of the Texas Blockchain Council told Cointelegraph there are talks to incorporate Bitcoin into the Texas Constitution. Bratcher claims that the Texas Constitution has been modified more than 500 times. Bratcher noted that there is a Texas state amendment regarding the use of cryptocurrency to pay property taxes. Bratcher made the following comment:
“Texas could amend its constitution to allow Bitcoin property tax payments. This would place Bitcoin on par with gold at Treasury and Texas Comptroller’s Office.
Although integrating Bitcoin in the Texas Constitution might be a significant first, Bratcher stated that it wouldn’t be on the state ballots until 2023.
Not only is it important to mention that states like Florida and Tennessee are exploring the possibility of accepting Bitcoin for property tax payments. Scott Conger, Jackson’s Mayor of Tennessee, announced that the city’s Blockchain Task Force is looking into ways to allow property taxes to be paid using Bitcoin. This news was made shortly after Miami Mayor Francis Suarez had announced that the city would allow residents to pay fees in Bitcoin and employees will be paid in Bitcoin.
Texas is aiming to go beyond mere legislation by incorporating a Bitcoin amendment in the Texas Constitution. Cointelegraph was told by Peter Vogel, Foley & Lardner LLP counsel, that constitutional amendments must be voted for by Texas citizens. This would make them more legal than the enacted crypto laws that have been signed off the governor.
Consider the challenges
Despite Texas taking extraordinary measures to be crypto-friendly, there are still challenges that could hinder legislation.
Bratcher, for example, pointed out that Washington, D.C. is the greatest obstacle to the continued growth in cryptocurrency in Texas. Bratcher stated that Washington, D.C. lacks clarity on cryptocurrency and has led to many Texas-based entrepreneurs moving to crypto-friendly countries such as Switzerland or Liechtenstein.
Related: Texas welcomes Bitcoin miners openly
Coinbase’s crypto yield program has been threatened with legal action by the U.S Securities and Exchange Commission. Bratcher said that although there is a positive crypto community in Texas, the Texas Blockchain Council still seeks to have some leeway with Texas’s Securities Board. Bratcher stated that the Texas State Securities Board is strict about interest bearing accounts.
Vogel also stated that even though Texas has passed and enacted crypto-friend legislation, it is important to understand how these laws will be challenged in Texas and federal courts.
It is not possible to predict how judges will interpret the constitution amendments or laws enacted until lawsuits are filed. However, the Texas voters could enact a constitution amendment to help us understand crypto’s social impact.