The Texas crypto law proposal has one huge flaw according to experts, despite following Wyoming’s example, hoping to provide regulatory clarity for crypto assets as we can see more in our latest crypto regulation news.
Texas aims to become the second US state to legislate regulatory clarity for crypto but the Texas crypto law proposal has one major flaw and there’s a gaping hole in the amendment bill according to Avanti CEO Caitlin Long. While looking positive for the industry overall, the new crypto-friendly amendments for the law proposed in Texas will lead to a lot of mess for BTC holders according to Caitlin Long.
Texas introduces a bill to define virtual and digital currencies like #bitcoin putting TX right behind Wyoming, but @CaitlinLong_ notes a big challenge remains https://t.co/1v9BR6PwWz @Cointelegraph thnx @lee_bratcher @txblockchain1 for comments!
— Rachel Wolfson (@Rachelwolf00) March 25, 2021
Introduced in mid-March, House bill 4474 aims to adapt the current laws to emerging technologies like blockchain and digital assets and the new bill proposes clarification of the definitions of digital currencies and control over them under commercial law. Long tweeted:
“First, IT’S AWESOME that Texas is likely to become 2nd state to treat Bitcoin the same as money under US commercial law. For lawyers out there Texas is proposing to apply the UCC ‘take free’ rules, which means innocent purchasers of Bitcoin & other virtual currencies take free of any adverse claims as long as they didn’t defraud the seller. THIS IS A BIG DEAL!”
1/ SOME THOUGHTS on the Texas #blockchain bills. Lots of good stuff here!! But Texans have more work to do. I hope sharing these thoughts helps you!
— Caitlin Long 🔑 (@CaitlinLong_) March 26, 2021
However, Avanti got a license in Wyoming but the Texas proposed bill has a huge flaw and doesn’t state how lenders can enforce their liens on BTC. Looking over the past year, crypto-related lending in various forms became a huge part of the industry and one of the best examples was the Ethereum booming defi space where platforms like Aave, Compound, and MakerDAO focused on lending:
“It still has a gaping hole. I’d encourage Texas to amend HB4474 to incorporate Wyoming’s language around possessory security interests, which maps to how Bitcoin lending actually works.”
She added that in Wyoming, the law explains how liens on BTC can be enforced and will allow for cleansing of dormant liens but the Texas bill states that the innocent buyers will not be a subject of these claims due to the “take free” rule which frees the buyers from the security interest. Speaking of Wyoming, The Wyoming DAO bill passed the Wyoming Senate committee and will soon start voting on the bill which allows the formation and operation of legally recognized decentralized autonomous organizations.
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