The Texas Department of Banking, recently on Wednesday, Jan. 2nd 2019, published a Supervisory Memorandum, which suggests that the dept. may consider stablecoins as normal currency, i.e. money. This move will further bring stablecoins and crypto-exchanges that allow trading with them, under a number of Texas laws and license requirements.
The memo, titled “Supervisory Memorandum – 1037,” published by the DoB-Texas, ventures deep into examining the regulations pertaining to cryptocurrencies under the Texas Money Services Act (chapter 151 of the Texas Finance code), and tries to address the current cryptocurrency trends, which also includes the introduction of stablecoins to the cryptocurrency markets. Stablecoins, which are basically a centralized cryptocurrency, are backed by the issuer’s conventional currency, precious metals, and algorithms.
As per the Act, the exchange of a sovereign-backed stablecoin for a future promise to make it available at a set date or location may be recognized as a money transfer, making a sovereign-backed stablecoin, money or money value under the Money Services Act. Further, the document says that a licensing analysis will turn on whether the stablecoin holder has a right to redemption for sovereign currency thus creating a monetary or monetary valued claim. This is true regardless whether the redemption right is expressly granted or implied by the issuer.
As for the Texas scenario, the cryptocurrency is not money under the Money Services Act, making it not a monetary transaction. However, if a sovereign currency is included in the cryptocurrency transaction, it may be considered a monetary transaction depending on how the sovereign currency is handled.