Everything is bigger in Texas, so it’s no surprise that the Lone Star State is taking steps to become America’s next Bitcoin (BTC) hotspot.
Most recently, Texas introduced two laws to ensure that cryptocurrencies are recognized under the state’s trading laws. Texas House Bills 4474 and 1576 both went into effect September 1, after being signed by Governor Greg Abbott last June. While HB 1576 set up a blockchain working group in Texas, HB 4474 provides a complete framework to show that virtual currencies have a place under Texas law.
In particular, HB 4474 adopted the proposed language of the Uniform Law Commission’s new Uniform Commercial Code (UCC). UCC Article 12 is expected to be finalized next year, but states are free to adopt the proposed language in the meantime, as demonstrated by HB 4474. Patrick Boot of Texas and a staff member at Hunton Andrews Kurth told Cointelegraph that the text of HB 4474 pointed to three things in particular:
“It defines the virtual currency and defines how control over the virtual currency is expressed or how one becomes a qualified buyer. After all, it shows how to perfect a security interest, which is extremely useful for doing business in virtual currency. “
To put the meaning of HB 4474 into perspective, Joseph Kelly, CEO of Unchained Capital – an Austin-based bitcoin financial services company – told Cointelegraph that, due to Texan crypto laws, Unchained and its customers now have legal certainty in activities such as buying bitcoin or being Accept security for loans.
Prior to HB 4474, Kelly mentioned that Bitcoin was so new and different, noting that previous laws weren’t very relevant to commercial transactions involving Bitcoin. In turn, Kelly stated that unclear definitions or uncertain legal remedies for Bitcoin pose an unnecessary risk to all parties: “Countries are not quick to provide clarity on how HB 4474 exposes consumers and their businesses to the risk of disputes and potential loss of money. “
While this illustrates the commercial status of digital assets, it’s important to note that Texas won’t be the first state to pass such legislation. Caitlin Long, a Wyoming-based proponent of cryptocurrencies, previously told Cointelegraph that Texas is the fourth US state to define virtual currencies after Wyoming, Rhode Island, and Nebraska.
From law to constitutional amendment
While Texas appears to be following in the footsteps of other innovative states, members of the Texas Blockchain Council – an industry association advocating blockchain-focused public policy initiatives – shared that bigger plans are in the works.
Lee Bratcher, president of the Texas Blockchain Council, told Cointelegraph that there is discussion about adding Bitcoin to the Texas Constitution, possibly a constitutional amendment. According to Bratcher, the Texas constitution has been amended more than 500 times. As a result, he determined that a change in Texas is possible in how cryptocurrencies are used for a property tax payment function. Bratcher commented:
“The idea is to change the Texas constitution to allow property taxes to be paid in bitcoin. This would bring Bitcoin on par with gold in the Texas Office of the Comptroller and Treasury. “
While the incorporation of Bitcoin into the Texas Constitution could be a first for crypto-friendly states, Bratcher mentioned that such a proposal won’t appear on state ballot papers until next year. 2023: “This proposal will likely take years.” In the meantime, Bratcher mentioned that the Texas Blockchain Council is working closely with the Texas representative Giovanni Capriglione on this project.
It’s important to note that other states like Florida and Tennessee are recently looking at ways to accept BTC for property tax payments. Jackson, Tennessee Mayor Scott Conger, announced in July this year that the city’s blockchain task force is working on ways to allow property taxes to be paid in bitcoin. The news comes shortly after Miami Mayor Francis Suarez announced that it would pay the city’s employees in BTC, while residents can also pay the fees in Bitcoin.
By implementing the Bitcoin Amendment into the Texas Constitution, Texas aims to go beyond the law. Peter Vogel, a consultant at Foley & Lardner LLP, told Cointelegraph that the constitutional amendments require a vote of Texas citizens, which would be a higher legal standard than the crypto laws enacted by the Texas governor.
Challenges to Consider
While Texas is taking unique steps to become one of the most crypto-friendly states in the United States, challenges could still stand in the way of future legislation.
For example, Bratcher points out that the biggest obstacle to further growth of cryptocurrencies in Texas is Washington, DC. According to him, the lack of clarity about cryptocurrencies by the federal supervisory authorities has led some Texan entrepreneurs to turn to crypto-friendly countries like Switzerland and Liechtenstein: “We don’t have the biggest problems we see at the federal level under control.”
Related: Crypto Cowboys: Texas Counties Greet Bitcoin Miners With Open Arms
That view may have been highlighted recently when the US Securities and Exchange Commission threatened to sue Coinbase over its crypto-profit program. With this in mind, Bratcher noted that despite having an active crypto ecosystem in Texas, the Texas Blockchain Board is still trying to befriend the State Securities Commission. According to Bratcher, the Texas State Securities Commission was strict on interest-bearing accounts.
Additionally, Vogel commented that while Texas has and has enacted crypto friendship laws, it’s important to see how those laws are challenged in both federal and Texas courts:
“Until lawsuits are filed to bring these laws to the judges, it remains difficult to know how the judges will interpret the constitutional amendment or enacted laws. However, if Texas voters pass a constitutional amendment, it would be a major milestone in terms of looking at cryptocurrencies from a larger societal perspective. “
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