HomeCryptoTexas takes steps to amend Bitcoin into state constitution

Texas takes steps to amend Bitcoin into state constitution

Everything is greater in Texas, which is why it shouldn’t come as a shock that the Lone Star state is making strikes to develop into America’s subsequent Bitcoin (BTC) hotspot. 

Most lately, Texas applied two legal guidelines to be sure that cryptocurrencies are acknowledged beneath state industrial regulation. Texas House Bills 4474 and 1576 each took impact on Sept. 1, after being signed into regulation by Governor Greg Abbott this previous June. While H.B. 1576 established a blockchain working group in Texas, H.B. 4474 offers a whole framework to show that digital foreign money has a spot beneath Texas regulation.

Specifically talking, H.B. 4474 adopted the proposed language of the Uniform Law Commission’s new Uniform Commercial Code, or UCC. UCC Article 12 is about to be finalized subsequent 12 months, however states are free to undertake the proposed language within the meantime, as demonstrated by Texas’ H.B. 4474. Patrick Boot, affiliate at Hunton Andrews Kurth, informed Cointelegraph that the textual content of H.B 4474 concisely factors out three particular issues:

“It defines virtual currency, while also establishing how to show control over virtual currency, or how to be a qualifying purchaser. Finally, it shows how to perfect a security interest, which is incredibly helpful for conducting business with virtual currencies.”

To put the significance of H.B. 4474 into perspective, Joseph Kelly, CEO of Unchained Capital — a Bitcoin monetary providers firm primarily based in Austin — informed Cointelegraph that because of Texas’ cryptocurrency legal guidelines, Unchained and their purchasers now have better authorized certainty surrounding actions equivalent to buying Bitcoin or accepting it as collateral for loans.

Prior to H.B. 4474, Kelly talked about that Bitcoin was too new and completely different, noting that earlier legal guidelines weren’t well-suited to industrial transactions with Bitcoin. In flip, Kelly defined that unclear definitions or unsure judicial therapies for Bitcoin create pointless dangers for all events: “States that do not transfer shortly to present the kind of readability equivalent to H.B. 4474 depart their customers and companies in danger for disputes and probably lack of funds.”

Although this clarifies the commercial law status of digital assets, it’s important to point out that Texas was not the first state to pass such legislation. Caitlin Long, a Wyoming-based crypto proponent, previously told Cointelegraph that Texas became the 4th U.S. state to define virtual currency, falling behind Wyoming, Rhode Island and Nebraska.

From legislation to a constitutional amendment

While Texas appears to be following in the footsteps of other innovative states, members of the Texas Blockchain Council — an industry association that advocates for blockchain-centric public policy initiatives — shared that bigger plans are underway.

Lee Bratcher, president of the Texas Blockchain Council, told Cointelegraph that there are discussions to integrate Bitcoin into the Texas Constitution, potentially as a constitutional amendment. According to Bratcher, the Texas Constitution has been amended more than 500 times. As such, he noted that a Texas state amendment related to the utilization of cryptocurrency for the function of property tax payment is a possibility. Bratcher remarked:

“There is the idea for a Texas constitutional amendment to allow property tax payment in Bitcoin. This would put Bitcoin on par with gold at the Texas Comptroller’s Office and Treasury.”

While integrating Bitcoin into the Texas Constitution may very well be a first for crypto-friendly states, Bratcher mentioned that such a proposal wouldn’t appear on state ballots until the year 2023: “This proposal will likely take years.” In the meantime, Bratcher mentioned that the Texas Blockchain Council is working closely with Texas House Representative Giovanni Capriglione on this project.

It’s also important to point out that other states such as Florida and Tennessee have recently been exploring 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 studying ways to allow for property taxes to be paid in Bitcoin. The news came shortly after Miami Mayor Francis Suarez announced the push for city employee salaries to be paid in BTC, while also allowing residents to pay fees in Bitcoin.

By implementing a Bitcoin amendment into the Texas Constitution, Texas aims to go above and beyond pure legislation. Peter Vogel, of counsel at Foley & Lardner LLP, told Cointelegraph that constitutional amendments require a vote from the citizens in Texas, which would be a greater legal standard than enacted crypto laws from the Texas Legislature that are signed by the governor.

Challenges to consider

Even though Texas is taking unique measures to become one of the most crypto-friendly states in the United States, challenges remain that could hamper legislation moving forward.

For instance, Bratcher pointed out that the biggest obstacle for the continued growth of cryptocurrency in Texas is Washington, D.C. According to him, the lack of clarity around cryptocurrency from federal regulators has resulted in a number of Texas-based entrepreneurs relocating to crypto-friendly countries like Switzerland and Liechtenstein: “We don’t have control over the biggest issues we see at the federal level.”

Related: Crypto cowboys: Texas counties welcome Bitcoin miners with open arms

This notion has possibly been highlighted recently with the U.S. Securities and Exchange Commission threatening to sue Coinbase over its crypto yield program. With this in mind, Bratcher noted that while there is a positive crypto ecosystem in Texas, the Texas Blockchain Council is still attempting to make leeway with the State’s Securities Board. According to Bratcher, the Texas State Securities Board has been strict about interest-bearing accounts.

Additionally, Vogel commented that although Texas has passed and enacted crypto friend legislation, it’s important to see how these laws will be challenged in both Texas and federal courts:

“Until lawsuits are filed to present these laws to judges, it remains difficult to know how judges will rule to interpret either the constitutional amendment or enacted laws. Nevertheless, if the voters of Texas enact a constitutional amendment that would be an important milestone about how crypto is viewed in a larger social perspective.”