Bitcoin (and other cryptocurrency) is the convergence of technology and money. As Facebook is climbing the mountain to have its own form of cryptocurrency, businesses must have a working knowledge and understanding of otherwise risk being left behind. This is particularly true if your business is already at the forefront of technology and/or looking to cross borders (particularly to Asia).
Essentially, cryptocurrency is a means of financial transaction that circumvents centralized authority (think banks and other regulated entities) in favor of multiple computer inputs that verify and approve transactions. This sea change not only avoids some of the regulatory components of traditional transactions, but it eliminates human error and fraudulent tampering.
There is a current storm brewing on cryptocurrency from the federal government. The Securities and Exchange Commission, the Commodity Futures Trading Commission and the US Treasury Department’s Inspector have all indicated their concerns over the use of cryptocurrency and attempted to enforce regulations on such use by calling such use the issuance of a security or commodity. Furthermore, there are concerns of money laundering; terrorism financing; and circumvention of tax obligations.
Nevada, however, is at the forefront of legislation recognizing that cryptocurrency (and more broadly all blockchain transactions) represent the future of business. For example, in 2017, Nevada enacted the “Uniform Electronic Transaction Act” which provided that Nevada prohibited local governments from independently taxing blockchain use. In 2019, Nevada went even further in creating the Regulatory Experimentation Program for Product Innovation which allows for the testing of new financial products without requiring licensing. Additionally, in 2019, the Nevada Legislature enacted a meaningful definition of “Public Blockchain” and authorized the use of blockchain records for all business entities (Corporations, LLCs, etc.) in the State of Nevada.
As with many emergent technologies, laws lag behind use. However, Nevada has set itself apart in this area and continues to be the best home for innovative businesses.