Banking institutions recognize as a monetary value the support that fiat money grants to this type of digital assets

The latest memorandum from the Texas Department of Banking qualifies the stablecoins as money. For this reason, its issuers will need a license to operate in that US state.

Charles Cooper, the Commissioner of the Texas Banking, published a document on Wednesday which details this information. Cooper points out that the Texas Law does not see cryptocurrencies as money and therefore it does not consider the exchange of cryptoactives for fiat money as a “currency exchange”, so new companies do not need currency exchange licenses to operate in this status.

However, the case of the stablecoins is different. According to the document, these can be considered as “money” or “monetary value” and any person who acquires the cryptoactive is entitled to the assets in sovereign currency that support the amount of tokens he or she has.

Is Cryptocurrency Money?

The reason why this happens and why the stablecoins are considered as money is due, according to Cooper, to the issuer “assumes the obligation to provide a sovereign currency in exchange for stablecoins at a later time”, whilst with cryptocurrencies it not always happen.

Only cryptocurrency to cryptocurrency transactions are not considered by Texas banking policies as money, whilst cryptocurrency-fiat transactions do represent a money transfer.

The memorandum define stablecoins as “a form of centralized virtual currencies that are backed by the issuer with sovereign currency, precious metals or cryptocurrencies and, therefore, it possesses intrinsic value”.

Because of this, the Monetary Services Law considers stablecoins as money or monetary value. “Receiving it in exchange for a promise to make it available at a later time or at a different location can be a money transfer”, Cooper said.

Stablecoins are also cryptoactive with stable prices, as the name implies. These do not suffer from characteristic volatility, so far, as it happened with Bitcoin and other cryptocurrencies during 2018.

Stablecoins seek to merge the best features of fiat (or traditional) currencies and cryptographic currencies: globalization, decentralization and, additionally and particularly, low volatility. They are digital assets designed to maintain a constant price, linked to a stable fiduciary currency.

Currently, there are three types of stable tokens: those guaranteed with fiduciary currency or products maintained by a custodian and with parity 1:1, those that other cryptocurrencies back and those that do not have backup guarantees.

Among some famous examples is Tether (USDT), which is a stablecoin that in the cryptocurrency exchange houses has become a substitute for the dollar; TrueUSD (TUSD), a token linked to the dollar and its reserves are held in the accounts of several trust companies, and USD Coin (USDC), a digital asset also backed by the dollar.

With these considerations, banking representatives in Texas inform to new companies, and to those who make exchanges, that they must comply with the relevant laws as appropriate when making money transfers. Other US states are studying concepts about this topic. Las week, New York announced it would have a group of experts that will give information to the governor, in order to be prepared and take the needed decisions.

By María Rodríguez


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