Texas May Recognize Stablecoins as Money: Bucking Trend in USA

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If cryptos are a new monetary invention, stablecoins are mere infants in the world of money. To date, the few stablecoins that achieved popularity have sometimes been controversial. Tether has generated no shortage of criticism and intrigue, though the Winklevoss twins’ Gemini Dollar seems to be gaining acceptance without loads of criticism.

One of the biggest issues for stablecoins is their legal status.

Texas Cryptocurrency

Unlike cash, most cryptos, like stablecoins, are considered to be more like securities or commodities. This may seem like a small matter, but from the perspective of being used for transactions, it is a big deal. The stablecoin project known as ‘Basis’ recently had to shut down after just eight months, because they couldn’t figure out a way to have their token treated as cash.

Now it appears that the state of Texas is bucking the trend, and may begin to treat stablecoins as cash, at least in some circumstances. A Supervisory Memorandum which was published on the second of January by The Texas Department of Banking, called ‘Supervisory Memorandum 1037’, has the potential to change how tokens that are tied to fiat currency are viewed legally.

Read: What are Stablecoins?

The Texas Stablecoin Coup

Supervisory Memorandum 1037 says that receiving a sovereign-backed stablecoin in exchange for “a promise” to make it available at a future date or different location could be recognized as a money transfer. This may mean that a stablecoin could be considered money, or money value, under the Texas Money Services Act

The memorandum continues:

“A licensing analysis will turn on whether the stablecoin provides the holder with a redemption right for sovereign currency thus creating a claim that can be converted into money or monetary value. This is true regardless whether the redemption right is expressly granted or implied by the issuer.”

The document also states that,

“cryptocurrency is not money under the Money Services Act,” and, “However, when a cryptocurrency transaction does include sovereign currency, it may be money transmission depending on how the sovereign currency is handled. A licensing analysis will be based on the handling of the sovereign currency.”

The takeaway from Supervisory Memorandum 1037 is that Texas may be moving to make stablecoins an asset class separate, at least in some cases, from the rest of the crypto universe. How this would play out with federal authorities is unclear, but much like the recent Texas court decision on the Affordable Care Act, Texas seems to be standing up for their rights.

Colorado Joins the Action

Last Friday two state lawmakers from Colorado introduced legislation which seeks to exempt cryptocurrencies and certain digital tokens from securities laws. The proposed legislation, called the “Colorado Digital Token Act,” would exempt tokens with a “primarily consumptive” purpose from securities laws.

The goal of the law is somewhat different than the recent move by Texas. Instead of creating the ability for stablecoins to be used as money, the Colorado Digital Token Act would remove “regulatory uncertainty” from the development space for companies that aren’t marketing tokens that have a “speculative or investment” value.

The Colorado Digital Token Act,

“Will enable Colorado businesses that use cryptoeconomic systems to obtain growth capital to help grow and expand their businesses, thereby promoting the formation and growth of local companies and the accompanying job creation and helping make Colorado a hub for companies that are building new forms of decentralized ‘Web 3.0’ platforms and applications,” according to the text of the proposed bill.

New Cash may be Coming Soon

While the means of creating crypto-based payments is different in the two states, the underlying goal is the seemingly the same. By treating cryptos as a security, it is next to impossible for them to compete with currency, which is subject to a totally different taxation regime.

Both Texas and Colorado also have a history of cutting their own path, with Colorado taking some of the most aggressive measures nationally to promote major changes to long-standing drug laws. Of course, the inability for cannabis business to access banking services is a big problem, which could figure into why trading tokens may soon be treated as cash in the state.


Nicholas Say was born in Ann Arbor, Michigan. He has traveled extensively, lived in Uruguay for many years, and currently resides in the Far East. His writing can be found all over the web, with special emphasis placed on realistic development, and the next generation of human technology. Contact

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