Last updated on June 18th, 2014 at 02:12 pm
An immense sum of financial institutions, central banks, federal governments and now state officials have been cautious regarding the peer-to-peer decentralized digital currency bitcoin. Some of the measures taken have been issuing consumer advisories and investor guidance notices, while others are now considering taking direct action.
Earlier this month, the Kansas Office of the State Bank Commissioner (OSBC) issued a guidance document in order to clarify the state’s stance on bitcoins and other virtual currency. Much like the others before it, the document discussed what virtual currencies are, how money is transmitted and businesses affiliated with the cryptocurrency market must abide by the Kansas Money Transmitter Act.
Reports are now surfacing The Sunflower State that suggests the OSBC is mulling plans on how it could handle companies and other organizations exchanging or transmitting digital currencies across the state.
Deryl Schuster, Kansas bank commissioner, conceded that state banking departments are having a difficult time attempting to figure out how to handle bitcoins and other virtual currencies. Nevertheless, Kansas officials believe something needs to get done.
Robin Lobb, who oversees money transmitter licensees for the commissioner, told The Wichita Eagle that the OSBC isn’t trying to regulate bitcoin or institute or promote legislation that could hurt the cryptocurrency. Instead, the OSBC is only interested in the transmitter aspect of it.
“[We want] to make sure that everyone knows we are not trying to regulate the currency, and we’re only concerned with the money transmitter part of it,” said Lobb, who noted there are 100s of digital currencies and none of them are legal tender. “It’s a very complex, convoluted solution.”
Over the past year, Lobb has received numerous inquiries regarding licensing requirements for establishments that are involved in digital currency transactions and virtual currency exchanges. The inquiries have been rapid and that is why the banking commissioner decided to release the guidance document in order to answer questions that interested individuals ay have.
In the end, Lobb believes cryptocurrencies are here to stay and “it’s not going away like most regulators had hoped.”
In the meantime, only one Kansas organization has filed a money transmitter license application and it was approved. Kansas hasn’t necessarily been a major facet of the bitcoin market, though one man did purchase a $500,000 house in bitcoins, while a law firm garnered local headlines for accepting bitcoins as an alternative method of payment.
“I think just generally speaking, our willingness to accept Bitcoins is really more of a philosophy of our firm as far as supporting our clients and supporting entrepreneurial types of businesses,” John Kennyhertz, a partner at the law firm, told the Kansas City Business Journal. “We do a lot of work for entrepreneurs of all shapes and sizes, from startups to innovative publicly traded companies. Our goal is to be able to do things that large law firms are unable to do a lot of times because of the bureaucracy. So when the opportunity came up to accept an alternative currency for payment for legal services it was something we jumped at.”
Bitcoin is currently trading at more than $600.