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Legislator Proposes Enactment Of The Uniform Regulation of Virtual Currency Businesses Act

Last month, California joined Hawaii, Nevada and Oklahoma in considering enactment of the Uniform Law Commission's Uniform Regulation of Virtual Currency Businesses Act.  California's bill, AB 1489, was introduced by Assembly Majority Leader Ian C. Calderon.  According to the ULC, the URVCBA "creates a statutory framework for regulating companies engaged in virtual currency business activity" and "eliminates legal gray areas for licensing and supplies the certainty needed for both regulators and the virtual currency industry". 

The  bill defines "virtual currency", with some exceptions, as "a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in legal tender".  If find the term "digital representation" to be a bit puzzling.  "Digital" is derived from the Latin noun digitus meaning a finger.  Because humans typically are endowed with 10 fingers, "digital" has come to mean numbers less than 10.  In modern times, the adjective is often used to describe computer technology because most, but not all, computers operate using binary digits (i.e, 0 and 1).  These computers are known as digital computers.  The other type of computer is an analog computer. 

Given the different meanings of "digital", the meaning of "digital representation" is ambiguous.  Although I doubt that the drafters of the URVCBA intended to define "virtual currency" as value that could be represented on one's fingers or in numbers less than 10, I'm not sure what is meant by a computer representation of value.  Perhaps a more accurate understanding is that virtual currency is a medium of exchange, unit of account, or store of value that is processed and maintained by computers.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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