Some meat from page 30 about the definition of "digital currency business" for the purposes of this act...
(d) “Digital currency business” means the business of offering or providing the service of storing, transmitting, exchanging, or issuing digital currency. “Digital currency business” does not include the following:
(1) Transmission of digital currency where the transaction is undertaken for non financial purposes and does not involve the transfer of more than a nominal amount of digital currency necessary to complete the transaction.
(2) Online games or gaming platforms that use digital currency that (A) have no market or application outside of those games or gaming platforms, (B) cannot be converted into, or redeemed for, fiat currency or digital currency, and (C) are not redeemable for real-world goods, services, discounts, or purchases.
(3) Customer affinity or rewards programs that use digital currency that can be redeemed for goods, services, or for purchases with the issuer or other designated merchants, but cannot be converted into, or redeemed for, fiat currency or digital currency that is not part of the customer af nity or rewards program.
(4) Issuance of a credit card voucher, letter of credit, or any value that is redeemable only by the issuer for goods and services provided by the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.
(5) A person or entity developing, distributing, or servicing digital currency network software.
(6) A person or entity contributing software, connectivity, or computing power to a digital currency network.
(7) A person or entity providing data storage or cybersecurity services for an enrolled digital currency business, if the data storage or cybersecurity services do not store digital currency.
For my part, the wording in #1 looks especially flimsy.
What the hell does "nominal" mean? Is "nominal" measured against some absolute dollar value, or against the scope of the task/services rendered? It's not hard to imagine some massive smart contract transactions that would require a lot of resources to perform, but which wouldn't otherwise have any financial purpose. Would those be deemed too costly, not nominally cheap enough, for this act?
I also wonder about the meaning of "non financial" here. What would this mean for a coin like ETH? ETH does not aspire to be anything more than grease for the Ethereum network. Nonetheless, it's now traded on exchanges for BTC, USD, etc. Does its rising value in trade mark it as "financial" for the purposes of this act, in every ETH transaction on the Ethereum network, even though it's not directly intended for financial purposes?
It's vague on purpose, as vagueness gives the appointed bureaucrats more power in their rule-making processes. Strict, detailed laws don't give them any extra leeway to make rules that favor rent-seekers and friends.
That's one view. Another is that strict, detailed laws without human judgement inevitably creates absurd results.
Law doesn't work without room for judgement. Enforce rules designed for toy models of reality[1] and people won't respect the law, but rather fear the lash. Of course, a certain type of person likes that, but (presumably) those who want to live in democracies don't.
[1] I'd love to believe that someday, certain economists would figure this out, too.
On the flip-side flexible rules allow for regulatory agencies to adapt and respond to changing conditions without having to wait on a legislative body to get around to updating its rules.
No, it makes them into regulatory bodies. Would you really trust Congress to legislate the minute details of FDA clinical trials or EPA pollution regulations? How about transportation safety codes or allocation of NSF/NIH funding for basic research?
This is a fundamental feature of most modern democratic bureaucracies: the power of regulators flows directly from the legislature which sets the goals and scope of each agency but it is up to the individuals in each organization, who have spent most of their lives in the relevant fields gaining direct experience, to decide on the specific implementation of the legislators' vision.
Off the top of my head, I think the Federal Law for Money Transmitter Business (MTB) carves out businesses for up to $100/day so unless a company is registered as a MTB I think that would be the daily cap.
The exclusion from being a digital currency business for online games,
> (2) Online games or gaming platforms that use digital currency that (A) have no market or application outside of those games or gaming platforms, (B) cannot be converted into, or redeemed for, fiat currency or digital currency, and (C) are not redeemable for real-world goods, services, discounts, or purchases.
raises a question. First note that the three qualifying conditions are joined by AND, not OR, so it seems a game must satisfy all three to escape being a digital currency business.
For (A), "have no market or application outside of those games or gaming platforms", is that limited to official markets? Many an MMORPG has tried to keep their game currency game only, going so far as to ban accounts that are caught trading game currency for outside currency, but nevertheless markets outside the game for their currencies have invariably arisen. If unofficial markets are sufficient, I wonder if any significant game will be able to qualify for the exclusion.
(d) “Digital currency business” means the business of offering or providing the service of storing, transmitting, exchanging, or issuing digital currency. “Digital currency business” does not include the following:
(1) Transmission of digital currency where the transaction is undertaken for non financial purposes and does not involve the transfer of more than a nominal amount of digital currency necessary to complete the transaction.
(2) Online games or gaming platforms that use digital currency that (A) have no market or application outside of those games or gaming platforms, (B) cannot be converted into, or redeemed for, fiat currency or digital currency, and (C) are not redeemable for real-world goods, services, discounts, or purchases.
(3) Customer affinity or rewards programs that use digital currency that can be redeemed for goods, services, or for purchases with the issuer or other designated merchants, but cannot be converted into, or redeemed for, fiat currency or digital currency that is not part of the customer af nity or rewards program.
(4) Issuance of a credit card voucher, letter of credit, or any value that is redeemable only by the issuer for goods and services provided by the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.
(5) A person or entity developing, distributing, or servicing digital currency network software.
(6) A person or entity contributing software, connectivity, or computing power to a digital currency network.
(7) A person or entity providing data storage or cybersecurity services for an enrolled digital currency business, if the data storage or cybersecurity services do not store digital currency.