GREAT BARRINGTON -- Berkshire County's largest bank has temporarily withdrawn from the BerkShares program while the directors of the local currency determine where it fits under new regulatory guidelines.
Berkshire Bank has been accepting BerkShares notes since the local currency program began in 2006. The currency is placed into circulation when citizens trade federal dollars for BerkShares at any of the local bank chains that operate BerkShare exchanges.
BerkShares program director Alice Maggio said the emergence of virtual currencies such as Bitcoin have caused regulatory agencies to develop new guidelines that are still being refined and developed.
The BerkShares program is a paper currency, not a virtual one, but Maggio said it is still unclear how it fits under these new evolving regulatory guidelines. BerkShares is currently working with lawyers, regulators and banks to clarify its status within these new guidelines. Berkshire Bank decided to temporarily withdraw from the program until those issues are resolved.
"We temporarily exited the program as BerkShares explores the legal and regulatory requirements set forth," said Tami Gunsch, Berkshire Bank's senior vice president of retail banking, in a statement. The statement provided no further information.
"They're basically taking a hiatus until we can get an opinion," said Maggio, who is also the program director for the Schumaker Center for a New Economics in Great Barrington, which originally launched BerkShares.
"They have said they will reconsider and try to resume if we basically have something clear to show the FDIC (Federal Deposit Insurance Corp.) examiner," Maggio said.
The FDIC is the main regulatory agency for banks in the United States.
"Because the virtual currency world is evolving so fast, the regulators are trying to catch up and see how to regulate these new systems," Maggio said. "It's the same thing that happened when money payment services started like eBay. They had to find out how to use those new technologies."
Although Berkshire has temporarily withdrawn from the program, the four other county banks that accept BerkShares -- Lee Bank, Lenox National Bank, the Pittsfield Cooperative Bank and Connecticut-based Salisbury Bank & Trust's two branches in South Egremont -- are still accepting the currency. Salisbury Bank & Trust is also planning on setting up a BerkshireShares exchange at its new branch on Main Street in Great Barrington, Maggio said.
Lee Bank President David J. Bruce said his financial institution hasn't experienced the kind of issues with BerkShares that Berkshire Bank has.
"I guess the easy answer is we haven't seen a compelling reason to drop it," Bruce said. "I just checked with our compliance people here and we haven't run into anything."
Bruce is aware of the issues involved in trying to form regulatory guidelines for the new currencies, and said if Lee Bank was faced with them it would also have to reconsider its participation in the BerkShares program.
"If the banking regulations were to change or they were to issue an opinion on them we would be forced to take a look at it," he said. "But as far as I'm concerned we haven't seen anything from myself or anyone at Lee Bank to preclude us from participating at this point."
Businesses that accept BerkShares currency say Berkshire Bank's decision to temporarily withdraw from the program has not affected them, said Betsy Andrus, the executive director of the Southern Berkshire Chamber of Commerce in Great Barrington. More than 50 of the chamber's members accept BerkShares.
"I haven't gotten any feedback on that," Andrus said.
"It hasn't affected my business," said Christopher Masiero, the co-owner of Guido's Fresh Marketplace, which operates stores in Pittsfield and Great Barrington.
In order to gain clarity on how the regulations affect BerkShares, Maggio said the organization has spoken with Jenny Kassan, the CEO of Cutting Edge Capital in Oakland, Calif., a company that collaborates with organizations that bring "new capital to the new economy."
Kassan did not return a telephone call seeking comment, but in a blog post on her company's website she references a recent meeting she had with BerkShares members in South Egremont to discuss policy and regulatory issues.
She refers to BerkShares as "one of the best established local currencies in the world," but states it is difficult for those types of currencies to find their way in the new regulatory environment.
"With growing attention to cryptocurrencies like Bitcoin, local currencies need to be aware of the laws and regulations that may affect them," Kassan wrote. "Unfortunately, it's not always clear which laws and regulations apply."
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