Cryptocurrency to be regulated in Nebraska
LINCOLN, Neb. (KOLN) – Nebraska Governor Pete Ricketts has approved legislation allowing the state to regulate cryptocurrencies.
According to UNL accounting professor Dr. Steve Hegemann, cryptocurrencies are a digital substitute for the US dollar that is not regulated by the federal government.
State lawmakers have said allowing cryptocurrency regulation will make Nebraska more attractive to tech companies.
Cryptocurrencies, including the most common, Bitcoin, are relatively new.
They were created in 2009.
Dr Steve Hegemann says this could be the first problem with cryptocurrency.
“Anytime you try to regulate something like this, there will always be unintended consequences that are just unforeseeable,” Hegemann said.
What Nebraska is doing is creating the Nebraska Financial Innovation Act. This essentially allows people to use cryptocurrency in the state and will be regulated by the Nebraska Department of Banking and Finance.
Senator Mike Flood said in a statement that this was a historic move in attracting investment and reinventing the way we do business. Accounting experts say there is no specific answer to regulate it.
“I don’t know how you regulate something that changes value by 40% in a week,” Hegemann said.
The value of any cryptocurrency is based on the demand at any given time, which means it is constantly changing.
The regulations would allow cryptocurrencies to be in U.S. banks, but they will require notifications that these accounts will not be regulated by the FDIC.
“Most of the investments are insured. I don’t know how you do this with cryptocurrency, ”Hegemann said.
Nebraska regulates one form of currency, but adding cryptocurrencies would place that around 10,000 different types.
Dr Hegemann also wonders how investments will be secured with cryptocurrency.
The new legislation states that cryptocurrency institutes will have federal deposit insurance.
“If your investment doesn’t come through, you’re going to be in trouble. Big problems, ”said Hegemann.
Hegemann worked in New York in 2007. He said that the way people borrow money to buy cryptocurrency is worrying and looks a lot like what happened in 2007.
The new law will prohibit cryptocurrency institutes from lending US dollars.
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