On Tuesday, three bills were introduced in the Michigan legislature that provide legal definitions of cryptocurrency and distributed ledgers. Unlike earlier state laws that have attempted to address these new technologies, Michigan is considering amending its criminal code.
UPDATED | June 13, 2018:
A fourth bill, HB6258, has now been introduced in the Michigan legislature. It adds both “cryptocurrency” and “distributed ledger technology” to the list of “financial transaction devices,” theft or fraudulent possession of which is a felony.
ORIGINAL | June 13, 2018:
Many states have added definitions to their statutes for blockchains or “smart contracts.” Usually the intent of these laws is simply to clarify that distributed ledgers can be legally binding contracts, and often this is done by amending the state‘s electronic transaction act.
However, Michigan is taking an unusual approach, defining “distributed ledgers” and “cryptocurrency” in its criminal statutes, clarifying that crimes committed using these new technologies will be punished just as they would be if committed with paper or fiat currency.
HB6257 would amend the penal code relating to fraud and forgery of documents. The statute currently applies to legal financial documents, such as promissory notes and deeds. The bill would grant distributed ledgers an equal legal status, clarifying that someone who attempts to commit fraud by “altering a record made utilizing distributed ledger technology,” is subject to the same 14-year maximum sentence as someone who forged a physical document.
While that bill elevates electronic documents to the same status as those on paper, HB6253 and HB6254 grant cryptocurrency the same status as fiat money, at least in the context of criminal prosecution for embezzlement or money laundering, respectively.
The two bills both feature an identical definition of cryptocurrency:
“‘Cryptocurrency’ means digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, and that operates independently of a central bank.”
While simply defining cryptocurrency is significant due to its somewhat murky legal status, both bills insert subtler wording to accomplish more substantive legal changes.
HB6254 adds the word “cryptocurrency” to the list of “monetary instruments” to which the money laundering statute applies, while HB6253 makes it clear embezzlement of cryptocurrency is identical to embezzlement of fiat currency. This is achieved by simply inserting six words into the statutes:
“‘Money or personal property’ includes cryptocurrency.”
Tim Prentiss is a writer and editor for ETHNews. He has a master’s degree in journalism from the University of Nevada, Reno. He lives in Reno with his daughter. In his spare time he writes songs and disassembles perfectly good electronic devices.
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