1/ SOME THOUGHTS on the Texas #blockchain bills. Lots of good stuff here!! But Texans have more work to do. I hope sharing these thoughts helps you!
First, IT'S AWESOME that Texas is likely to become 2nd state to treat #bitcoin the same as money under US commercial law. 🚀💥🤠
First, IT'S AWESOME that Texas is likely to become 2nd state to treat #bitcoin the same as money under US commercial law. 🚀💥🤠
https://twitter.com/Rachelwolf00/status/1375096425776873474
2/ This is AWESOME & is LONG overdue. For lawyers out there Texas is proposing to apply the UCC "take free" rules, which means innocent purchasers of #bitcoin & other virtual currencies take free of any adverse claims as long as they didn't defraud the seller. THIS IS A BIG DEAL!
3/ It's same as the in-process proposal of @uniformlaws. Texas is jumping out ahead to adopt it early. I've been an observer of Uniform Law Commission process & it has made great strides to get to where it is--namely that #control of a virtual currency is the determining factor.
4/ BUT there's a gaping hole in both Texas' bill & @uniformlaws draft proposal--namely, how does a lender create a valid, enforceable lien on #bitcoin? Unless this is clarified, applying UCC "take-free" rules can override legitimate claims of lenders. It won't (& shouldn't) fly!
5/ Think this doesn't matter? PLEASE read this tweetstorm VERY carefully (including relevant @Tesla lender documentation pertaining to proceeds from sale of inventory for #bitcoin):
https://twitter.com/CaitlinLong_/status/1358946625142489088?s=20
6/ To summarize, @Tesla's lenders have a VALID, LEGITIMATE claim to proceeds from car sales for which it collects #bitcoin as payment. But Texas' new law would mean those liens may not be valid, bc an innocent purchaser who didn't know about them "takes free" of those liens.
7/ So...if the Texas law passes as proposed, it will probably create a lien mess where lenders may lose out on their VALID #bitcoin liens. Enacting this bill may cause legit lenders to leave Texas (assuming the bill actually becomes law, over the VALID objections of lenders).
8/ I've given this same feedback to @uniformlaws & am optimistic it will be incorporated into the final ULC proposals, which are due in summer 2022. But Texas is jumping out ahead--which I admire (#Wyoming also did this & it's awesome that Texas may join🤠). But it's crucial...
9/ ...that Texas enacts a law that fully works. I LOVE LOVE LOVE the Texas proposal to apply the "take-free rules" to #bitcoin in more than just one state--& especially that the second state is Texas. #Wyoming & Texas have a lot in common🤠. But going halfway is problematic.
10/ I'd strongly encourage the Texas Blockchain Coalition to dig in & realize the @uniformlaws proposal is incomplete. As it currently stands (& it's not yet complete), it requires perfection of security interests by filing. In most states perfection by filing is still in PAPER🤦♀️
11/ Perfection by filing IN PAPER FORM is simply incompatible with #bitcoin & similar technologies. There's no way for a purchaser to search for existing liens on #bitcoin when the filing is on PAPER🤦♀️. This is why #Wyoming's approach is elegant--it maps to CONTROL of #bitcoin...
12/ ...namely, POSSESSION/CONTROL of a private key should be how a security interest in #bitcoin is perfected, *NOT* perfection by filing. Filing in most states is still by paper...that's not just #Boomer, it's #GreatestGeneration (to quote a prominent lawyer, who I won't name😉)
13/ And using possessory security interests is elegant bc there's lots of case law pertaining to them, so applying them to #bitcoin/virtual currencies is not a bridge too far.
I understand why @uniformlaws didn't go there in the beginning, but I'm optimistic they'll land there.
I understand why @uniformlaws didn't go there in the beginning, but I'm optimistic they'll land there.
14/ Keep in mind, the language in Texas HB447 borrows from the @uniformlaws proposal, which evolved substantially from early drafts & is moving in the right direction! Applying the "take free" rules to #bitcoin is absolutely the right answer. But the ULC process is unfinished.
15/ It still has a gaping hole. I'd encourage Texas to amend HB4474 to incorporate #Wyoming's language around possessory security interests, which maps to how #bitcoin lending actually works. Possession/control of a private key is EVERYTHING in bitcoin. Paper filings are a joke🤡
16/ BEST WISHES to Texas in this process. I know how hard it is to turn ideas into laws, & Texas' HB4474 is a HUGE STEP in the right direction. I hope this helps & wish the best to @lee_bratcher & the Texas #Blockchain Coalition!🤠👊
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