Florida Chief Financial Officer Jimmy Patronis issued an official release that outlines a plan to prevent fraudulent cryptocurrency offerings from taking advantage of unsuspecting consumers.
The statement, entitled “Florida Needs Cryptocurrency Oversight”, details the importance of creating a statewide cryptocurrency chief.
Cryptocurrencies are increasingly being offered as payment options, integrated by e-commerce merchants, physical stores and agencies. Regulators are responding in various ways. While Patronis views cryptocurrencies as a perceived threat, he pledges to “keep pace with demand and not deter innovation while monitoring for fraudulent behavior and scams.”
“We cannot allow the cryptocurrency industry to expand in Florida unfettered and unchecked with the potential for so many, including our large population of seniors, to be exploited,” he says. “By taking an active, comprehensive and balanced approach, our state will provide an appropriate level of scrutiny for emerging digital asset technologies. It is absolutely essential that Florida create safeguards to protect our consumers from fraud.”
In May the Seminole County Tax Collector became the first US government agency to announce that it will accept cryptocurrency for payments – Bitcoin and Bitcoin Cash.
Seminole County is part of the Orlando-Kissimmee-Sanford Florida metropolitan area. It has a population of 445,479 and a median age of 39.2. Median annual income for residents is $61,311 compared to Florida’s median annual income of $50,860 and median age of 42.1.
Payments for certain government services including property tax, driver license and ID card fees, tags and titles will be accepted by Seminole County starting this summer and will be processed by BitPay, a global payments provider. The payment options are being used as an alternative to credit cards in order to eliminate “traditional credit card fraud and identity theft risks associated with credit cards.”
“For years, paying taxes by credit or debit card meant using a third-party processor with heavy fees. The blockchain allows the Seminole County Tax Collector to eliminate much of those heavy fees while improving payment accuracy, transparency, and efficiency which ultimately benefits Seminole County tax payers,” said Tax Collector Joel Greenberg. “The aim of my tenure in office is to make our customer experience faster, smarter, and more efficient, and to bring government services from the 18th century into the 21st century, and one way is the addition of cryptocurrency to our payment options.”
Patronis is cautious about adoption. In addition to leading the way on regulation and oversight, the CFO wants to target initial coin offerings (ICOs), many of which are under investigation.
“I have directed my office to create a position that will oversee how current securities and insurance laws apply to Initial Coin Offerings (ICOs) and cryptocurrencies as well as shape the future of these regulations in our state,” said Patronis. “ICO and cryptocurrency companies based in Florida will also be required to register with the Office of Financial Regulation (OFR) under the supervision of the cryptocurrency chief. The new position will coordinate the efforts of OFR and Office of Insurance Regulation (OIR) regarding the development of policy, legislation and regulation.”
Opponents question how battling crypto scams on the state level can help eradicate bad actors when the cryptocurrency markets are global, and when any Floridian can create an account on a cryptocurrency exchange, such as Coinbase, Binance, Gemini or Kraken, or on a decentralized exchange, to make investments or trades.
Regulators from different countries are coordinating efforts to crack down on scammers and fraudsters.
Operation Cryptosweep by federal regulators from the US and Canada to root out cryptocurrency schemes and scams is ongoing. The operation has resulted in at least 70 inquiries and investigations, and 35 pending or completed enforcement actions related to ICOs or cryptocurrencies since the beginning of May 2018.
ICOs still remain a viable and effective way to raise significant amounts of capital for legitimate blockchain and cryptocurrency startups.