Editor’s note: From bitcoins to initial coin offerings, blockchain and much more, the evolving and rapidly growing world of cryptocurrency is a opuzzle palace for most people. WRAL TechWire reached out to Jim Verdonik and Whitney Christensen – experts as “crypto lawyers” at the law firm Ward and Smith for an update and explanation about all that’s happening.
The two wrote the following article as if they were being interviewed in a Q&A format.
Whitney is a government relations lawyer who works with state legislators and administrative agencies. WCChristensen@wardandsmith.com
The Q&A follows:
- We asked Jim and Whitney to share their views about many recent exciting changes in the cryptocurrency world.
JIM: People always criticize lawyers for being wishy-washy. I’ll start by making a concrete prediction. I predict that June 2018 will go down in history as the pivotal month for regulatory changes in the Crypto World. It’s the month both national and state regulators stopped wishing the crypto world would just go away and instead decided we need to develop rational rules of the road to let people take advantage of opportunities while protecting the public against fraud and pipe dreams. This is happening simultaneously on many fronts. Whitney can tell you about state developments.
- Whitney, I understand you had a victory at the state legislature recently.
WHITNEY: Yes, on behalf of a client we were able to pass legislation to amend the North Carolina Money Transmitters Act to resolve a section of the Act related to permissible investments of virtual currency exchanges.
- Why did the law need to be changed?
WHITNEY: The original sponsors of the Act and stakeholders who worked on it in 2015 did not anticipate the exponential increase in the value of Coins. Because of this growth, the original permissible investment requirement is essentially impossible to comply with today. We feel very fortunate that the legislation made it through this year, because there was a time sensitive need to fix this for the virtual currency industry in the state.
JIM: Let me say that Whitney is being modest here. If the law had not been changed this year, all of the Coin Exchanges would have had to close down the Coin accounts of all their North Carolina clients and there would be no way to buy or sell virtual currency in the state.
- Would that have affected a lot of people?
WHITNEY: Well Rick, our client Coinbase tells us that they just surpassed 100,000 account holders in North Carolina. Collectively those accounts hold several hundred million dollars of Coins, and that is just within Coinbase. Coinbase is the biggest player in the virtual currency exchange space in the U. S., but there are many other exchanges operating here as well. So, yes, this would have impacted the investments and coin usage of a big segment of the state’s population.
- Those are surprisingly big numbers for North Carolina.
JIM: That’s why we’re sitting with you today Rick. Some people still think Coins are something just for people in Asia or California or South America. In reality, Coins are entering Main Street America. Everyone from Millennials to Baby Boomers are adding them to their investment portfolios and people are now using them for everyday purchases at places like Subway, KFC, Reeds Jewelers, Whole Foods and Microsoft. Currently Coinbase alone has more account holders than the brokerage firm Charles Schwab.
- So, Whitney, how did you explain all this to our state legislators?
WHITNEY: We knew going into this year’s legislative session that it would be one of the shortest in modern history. So, we made our messaging succinct and perfectly teed up our proposed legislation before the session even began. We didn’t leave anything to chance, because it had to pass this year.
- Government acting quickly? That’s unusual. How did that happen?
WHITNEY: Fortunately, Rep. Stephen Ross agreed to help us with the bill, which was huge because he sponsored the original Money Transmitters Act and is very well respected on these issues. With Rep. Ross’s help and the help of a handful of other key House and Senate members we explained to the rest of the Legislature that without this fix, the state’s virtual currency presence would dry up and NC would be branded as a state evolving in the opposite direction of technology.
- How are other states dealing with this?
WHITNEY: We also told legislators that we would be one of only two states in the nation (Hawaii is the other) without access to virtual currency exchanges if we ended up inadvertently regulating them out of North Carolina.
Did that concern the legislators?
WHITNEY: State lawmakers genuinely want to do the best for the people they represent and I don’t think you need to fully understand the intricacies of our virtual currency regulations to realize that we needed to fix this for the people of the state.
JIM: Let me add that Whitney is the master of the two P’s – patience and persistence. Sometimes it takes a lot of effort getting the legislators to know what’s right. I understand Whitney was essentially camped out at the Legislature for a week straight before the bill ultimately passed.
Next: Ward and Smith now accepts Bitcoins as payment and much more.