U.S. Government Modifies Commercial Code to Define Cryptocurrency Separately From Electronic Money

U.S. Government Modifies Commercial Code to Define Cryptocurrency Separately From Electronic Money

The American Law Institute and the Uniform Law Commission have been invited to participate in the new joint committee that the United States of America has established (ALI).

The group’s goal is to finalize changes to the UCC that address the regulation of transactions involving digital assets.

As a result, it is suggested that all 50 states in the United States adopt the changes. The specifics of how laws are passed, however, can change from one region to another.

The Crypto Industry in the United States Prepares for Change

Last month, the committee’s proposed amendments to the UCC were approved in their final draft form. Articles 3 and 9 contain the most important changes for the crypto market. However, important information about the new regulations was also included in Article 12.

According to those with knowledge of the situation, the committee has introduced the idea of “controllable electronic records.” The new idea encompasses not only blockchain-based assets but also other types of digital assets that may be developed in the future.

As an added bonus, any file saved to a computer can be considered a controllable electronic record. Cryptocurrencies and non-fungible tokens (NFT) are a part of this framework as well, though they are classified differently than electronic money. The revised definition of money that applies to digital currencies based on fiat currency also includes electronic money.

CBDC As Digital Currency

After the change, CBDC issued by central banks may be considered digital currency. Similarly, the most up-to-date regulations do not classify privately issued crypto tokens alongside CBDC.

J.D. Supra opines that this indicates a distinction between CBDC and cryptocurrency with respect to the security interest involved. The security interest in CBDC can only be realized if the lender exercises control over the CBDC.

A lender is now required by the amendment to have access to the borrower’s private keys for the crypto asset. This makes it possible for cryptocurrency tokens to be sent to the lender’s wallet. Here, the collateral backing a cryptocurrency takes precedence over all else.

ETC was established in 2019 by the US government and was modeled after ULC. It was set up to deal with the complex legal issues that arise when dealing with cryptocurrencies, NFTs, and other forms of cutting-edge digital assets. U.S. jurisdictions everywhere have adopted the UCC as a model law for regulating business between states.

Therefore, the changes will be accepted and implemented across the board in every state in the US.

Guidelines for Cryptographic Practice in the United States

The United States, like many other nations, has a well-organized crypto ecosystem despite the absence of thorough regulations. The federal and state governments have achieved a great deal of success in the area of regulation.

In addition, the Financial Crimes Enforcement Network (FinCEN) of the United States does not recognize cryptocurrencies as legal tender. The agency classifies cryptocurrency exchanges as money transfer services because crypto tokens are considered legal tender.

Together with the Department of Justice, the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) regulate the crypto market.

While progress has been made in securing the cryptocurrency market, the industry still requires more rules to manage its growth.

There is no country that has succeeded 100% in regulating the crypto industry. The United States, however, is one of the few countries that has actually made progress.

Orizu Augustine
Orizu Augustine is an experienced crypto writer working for Alltechcraft. Having passion for writing, he covers news articles from blockchain to cryptocurrency and iPhone and Samsung related articles.