There are more and more in Texas, but when it comes to crypto-friendly legislation, it seems like it is not … yet. On March 12, 2021, Texas Representative Tan Parker introduced the Uniform Commercial Law, also known as the UCC, Amendment Bill (Bill 4474) to better align commercial law with blockchain innovation and digital asset regulation.
In particular, the Texas UCC amendment seeks to recognize virtual currencies under commercial law. Bracker, chairman of the Texas Blockchain Council, an organization that was recently formed as a trade association with the goal of making Texas a leader in blockchain development nationally, told the Cointelegraph that the Texas Blockchain Council worked closely with the Texas legislature to develop this bill and pointed out that if the law on entrepreneurship is passed, it will change the definition of digital currencies and the legal definition of control:
“The Texas Blockchain Council is working with the Joint Legal Committee on the language of the UCC Bill, as well as with other stakeholders to ensure that they are all familiar with the language.”
Texas aims to be second only to Wyoming, but the challenges remain
HB 4474 is similar to what Wyoming is already doing with its Digital Assets Act, which was passed on February 26, 2019 and entered into force on July 1, 2019, according to Bratcher. “If the UCC amendment is passed, Texas will take the lead. next to him. Hand in hand with states like Wyoming that have already paved the way for regulatory clarity, Bratcher commented.
However, it is worth noting that a few more issues have not been resolved. Caitlin Long, CEO and founder of Avanti Financial Group, a Wyoming bank set up to act as a bridge between digital assets and a US dollar payment system, told Cointelegraph that HB 4474 is similar to Wyoming law in a way: seeking to define virtual currencies. It has long been mentioned:
“This is a big plus because the legal status of Bitcoin in most US states is unclear, which means that judges do not have a roadmap for resolving disputes, and the parties do not have clarity about their rights and responsibilities.”
Long also noted that if HB 4474 is passed, Texas will join Wyoming as the only US state to clarify this important area of law. “And the laws of Texas and Wyoming are doing it right,” Long said. “Recognizing virtual currency control is crucial.”
However, Long pointed to a critical gap in HB 4474. Long said the law does not specify how a creditor can enforce a grip on virtual currency. She commented: “In legal parlance, this is called” How to raise interest rates on collateral “. ”
Long explained that she is concerned that bitcoin (BTC) holders will “get stuck in the franchise anarchy in the US” because US trade law does not clarify mandatory bitcoin franchises. This became even more worrying for Long as she notes that there has been an increase in secured bitcoin lending as collateral in recent years:
“I think the franchise anarchy in bitcoin is already on the rise. Bitcoin holders risk encountering old and unknown security for their coins that they had no way of discovering before buying – the higher the price of bitcoin, the more financial incentive for lawyers to pursue such claims. ”
In contrast to HB 4474, Long noted that the Wyoming Act is clear on how lenders can create a forced franchise on Bitcoin while still allowing for passivity. Unfortunately, the HB 4474 has not done so yet. Instead, HB 4474 claims that an innocent shopper will not be subjected to such negative claims while complying with “free receipt” rules.
While this was the case, Long pointed out another question that made one wonder what would happen to existing mortgages, which were in force before HB 4474 became law. “Won’t Bitcoin lenders want viable security in Texas? And will this affect the willingness of bitcoin lenders to lend to Texas customers? ”
Texas remains positive despite concerns
While some critical concerns about HB 4474 remain, Bracker indicated that eventually there will be more recommendations for the UCC bill: “We are working on a tire that will move in the same direction as Wyoming and will continue to pass more laws. “