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house Bill H.R. 528

Easing Regulations for Blockchain Firms That Don’t Handle Consumers’ Money

Argument in favor

Regulatory complexities and state-by-state variation in money transmitter regulation laws are a barrier to blockchain’s growth in the U.S. Since they don’t handle customers’ money, there’s no reason for non-custodial blockchain entities to register as money transmitters. Codifying this in law would boost U.S. blockchain and cryptocurrency competitiveness.

David's Opinion
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07/04/2019
Final update complete, it’s almost midnight so everyone enjoy the 4th! I’m in favor of easing regulations on crypto as it’s entire purpose is to be independent from any government or bank. As to this specific bill, as someone involved in the crypto space, I can’t make heads nor tails of what this bill is trying to deregulate. Congress needs to bring in actual experts on crypto currency so they (and we) know what they’re regulating. Addressing Annette: You said anyone that deals with equity transactions needs to be regulated. In my opinion, trying to regulate cryptocurrency is near impossible and an over reach of government powers. However, that’s an argument for another time as this bill is rather specific. This bill is specifically about people in the crypto space that don’t actually touch the consumer money. These people would be called ‘miners’ what they do is they solve complex series of math problems to confirm whether or not a transaction is valid, see the video linked below for more. As such, they only secure the network and trying to regulate them wouldn’t be necessary. Especially considering the fact that except for large companies (who aren’t even in the US anyway because of these crap regulations) most miners are anonymous and there is no way to figure out who they are or how to regulate them in the first place. It’s like the system in Florida where you’re supposed keep track of and pay sales taxes on all online purchases, on paper, at the end of the year, in stead of being charged the sales tax when purchasing the item. About companies not working in the US: Near every large crypto service (mining, exchanges, etc) either isn’t based in the US or doesn’t even offer service to the US. These regulations are encouraging crypto-related companies to go to other countries, which means those countries get an economic boost, more jobs, and more tax revenue, that we could be getting. Congress regulating things they don’t understand only hurts us. Update: Here’s a video explaining how crypto currencies work for those who don’t understand it: https://youtu.be/bBC-nXj3Ng4
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BananaNeil's Opinion
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07/04/2019
Block chain is the technology we need to upgrade our currency, and continue globalization. Blockchain will also allow for us to build a better internet. One which is publicly accessible and distributed through peer-to-peer nodes. An investment in blockchain is an investment in freedom, and the future.
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Troy's Opinion
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07/04/2019
This is the future. We need to be ahead of the curve and trust me we are way behind.
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Argument opposed

Individual states already have laws regulating money transmitters’ registration requirements, and it’d be overreach for the federal government to override those state-level regulations. Additionally, it’s not clear cryptocurrency exchange and blockchain entities should be required to register as money transmitters under existing law.

Annette's Opinion
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07/04/2019
Any entity that deals with an equity transaction must be regulated in order for the protection of all parties involved.
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DrCindyBean's Opinion
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07/04/2019
Is this a great way to help out money laundering mobsters?
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AnonymousPatron's Opinion
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07/04/2019
If you think that the 2008 meltdown was bad then....No just No.
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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
  • The house has not voted
      house Committees
      Committee on Financial Services
      Courts, Intellectual Property, and the Internet
      Crime, Terrorism and Homeland Security
    IntroducedJanuary 14th, 2019

What is House Bill H.R. 528?

This bill — the Blockchain Regulatory Certainty Act — would affirm that blockchain developers and service providers that don’t handle consumer funds don’t need to register as money transmitters at either the state or federal level, since their only function is to validate the network’s integrity by providing more security for those who use digital assets.

This idea of a “safe harbor” for non-custodial blockchain developers and service providers is akin to how internet service providers (ISPs) can’t be held responsible for their users’ actions, and are instead considered a “service.”

Entities eligible for safe harbor would include miners, which validate network integrity, and multi-signature providers of asset security.

Impact

Non-custodial blockchain entities; miners; and multi-signature providers of asset security.

Cost of House Bill H.R. 528

A CBO cost estimate is unavailable.

More Information

In-DepthRep. Tom Emmer (R-MN) reintroduced this bill from the 115th Congress to provide clarity to blockchain entities that never take control of consumer funds by affirming that they don’t need to register as money transmitters. Emphasizing blockchain's importance to the U.S. economy's future, Rep. Emmer said:

“The United States should prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth. These technologies hold untold promise for our economy and for all Americans.” 

When he introduced this bill alongside two other bills supporting the blockchain industry in the 115th Congress, Rep. Emmer said:

“The United States should prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth, which is why I am introducing these bills. Legislators should be embracing emerging technologies and providing a clear regulatory system that allows them to flourish in the United States.”

Coin Center, the leading non-profit research and advocacy center focused on the public policy issues facing cryptocurrency and decentralized computing technologies such as Bitcoin and Ethereum, has advocated for a safe harbor of this type since 2016. Coin Center’s Jerry Brito argues:

“State money transmission licensing laws are broadly drafted and carry harsh penalties for failure to comply. There is no reason for these laws to ever apply to persons who facilitate cryptocurrency use but who do not hold other people's coins. Only custodians present a risk of loss that would be sensibly addressed through licensing. But clarifying this particular interpretation of each state's unique money transmission statute is a slow and inconsistent process… A federal safe harbor would instantly make the entire US a welcoming home for developers and technologists who are designing, building, and operating the fundamental infrastructure behind cryptocurrency and open blockchain networks.”

The U.S. Commodity Futures Trading Commission (CFTC) supports this bill’s legislative approach. The CFTC’s Commissioner, Rostin Benham, argued that crypocurrencies are “here to stay,” saying that:

“[V]irtual currencies may – will – become part of the economic practices of any country, anywhere. Let me repeat that: these currencies are not going away and they will proliferate to every economy and every part of the planet.”

Tim Prentiss, a writer and editor for ETHNews, is skeptical about this bill’s necessity. He argues that the relevance of the federal law that makes it a crime to operate a money transfer service without a license — which forms the need for this legislation — is unclear. However, despite Prentiss’ view, it’s worth noting that some crypto exchange operators have been charged under the statute.

This bill has one cosponsor, Rep. Darren Soto, in the current session of Congress. Last Congress, it had no cosponsors and didn't receive a committee vote.


Of Note47 state and territorial governments regulate money transmission by requiring money transmitters to be licensed and compliant with various bonding, minimum-capital, and other consumer-protection requirements. Operating without a license can lead to severe state and federal fines, penalties, and criminal sanctions.

Generally, these regulatory requirements are “extraterritorial,” meaning that they’re based on the customer’s location, rather than the business’ location. Thus, online money transmitters need to obtain licenses for every state and territory where they have customers.

Further complicating matters, the definitions of “money transmission”, “money”, and “monetary value” vary from state to state. As a result, the set of activities that constitute “money transmission” vary from state to state, and digital currencies may or may not fit these various definitions of “money,” and various digital currency businesses may or may not fit these definitions of “money transmitter.” This regulatory patchwork creates a “looming threat of prohibitory, permission-based regulation and licensing,” which makes it harder for U.S.-based non-custodial blockchain entities to plan and grow.

Explicitly making non-custodial blockchain entities exempt from licensing would remove this barrier to their growth in the U.S. This is important for U.S. competitiveness in the global cryptocurrency innovation race, where many say it’s beginning to fall behind.

Since these businesses don’t hold customer funds, they don’t pose a solvency risk to customers. Moreover, to the extent that they present some consumer protection risks, those risks are best addressed through other legal and regulatory regimes, such as state and federal Unfair, Deceptive, or Abusive Acts and Practices Law (UDAAP) and contract law.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / matejmo)

AKA

Blockchain Regulatory Certainty Act

Official Title

To provide a safe harbor from licensing and registration for certain non-controlling blockchain developers and providers of blockchain services.

    Final update complete, it’s almost midnight so everyone enjoy the 4th! I’m in favor of easing regulations on crypto as it’s entire purpose is to be independent from any government or bank. As to this specific bill, as someone involved in the crypto space, I can’t make heads nor tails of what this bill is trying to deregulate. Congress needs to bring in actual experts on crypto currency so they (and we) know what they’re regulating. Addressing Annette: You said anyone that deals with equity transactions needs to be regulated. In my opinion, trying to regulate cryptocurrency is near impossible and an over reach of government powers. However, that’s an argument for another time as this bill is rather specific. This bill is specifically about people in the crypto space that don’t actually touch the consumer money. These people would be called ‘miners’ what they do is they solve complex series of math problems to confirm whether or not a transaction is valid, see the video linked below for more. As such, they only secure the network and trying to regulate them wouldn’t be necessary. Especially considering the fact that except for large companies (who aren’t even in the US anyway because of these crap regulations) most miners are anonymous and there is no way to figure out who they are or how to regulate them in the first place. It’s like the system in Florida where you’re supposed keep track of and pay sales taxes on all online purchases, on paper, at the end of the year, in stead of being charged the sales tax when purchasing the item. About companies not working in the US: Near every large crypto service (mining, exchanges, etc) either isn’t based in the US or doesn’t even offer service to the US. These regulations are encouraging crypto-related companies to go to other countries, which means those countries get an economic boost, more jobs, and more tax revenue, that we could be getting. Congress regulating things they don’t understand only hurts us. Update: Here’s a video explaining how crypto currencies work for those who don’t understand it: https://youtu.be/bBC-nXj3Ng4
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    Any entity that deals with an equity transaction must be regulated in order for the protection of all parties involved.
    Like (33)
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    Is this a great way to help out money laundering mobsters?
    Like (14)
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    If you think that the 2008 meltdown was bad then....No just No.
    Like (12)
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    I have only a very general understanding of how blockchain transactions are used and how the values of cryptocurrency inflate and deflate over time. I have never attempted to use any of this, so I really can’t develop any kind of informed opinion. I only have a gut level emotional response of “Hmmmm.... Interesting”- which I hope is cryptic enough.
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    If Emmer introduced it, it can't be good He is a hatefilled moron that took over in Michelle Bachman's district Shouldn't have yo say anything else
    Like (6)
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    Block chain is the technology we need to upgrade our currency, and continue globalization. Blockchain will also allow for us to build a better internet. One which is publicly accessible and distributed through peer-to-peer nodes. An investment in blockchain is an investment in freedom, and the future.
    Like (6)
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    This bill is a guarantee to corruption, plain and simple. If you vote for it, I guarantee you will use this to corrupt means in short notice.
    Like (5)
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    This is the future. We need to be ahead of the curve and trust me we are way behind.
    Like (4)
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    If someone were to dig deep enough I believe you would find that crypto currencies agencies are really owned by big banks. Only now if they make a big mistake they will use crypto currency as their “bailout”.
    Like (4)
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    Anything to do with any financial operations needs to be governed. I trust the organizations as far as I can throw the Statute if Liberty.
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    Scorpions will always sting you if give them a way in. Digital thieves will always find a way to steal. Like Trump, Putin, and the mob; reined businesses and lives left in their wake, Smiling faces. They are crime, and crime don’t pay.
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    No easing of regulations on blockchain firms.
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    Individual states already have rules & regulations so the Feds adding or changing what the states have already taken care of is OVERREACH. Besides any entity that has anything to do with money MUST BE REGULATED COMPLETELY. TOO MUCH CHANCE OF MONEY DISAPPEARING otherwise.
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    Leave it to the states!
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    To me this sounds an awful lot like how we got into the Great Depression when we were buying and selling paper that was worth nothing. What is backing up the blockchain funds? Are they on the gold standard somewhere? What do you get when you buy blockchain currency? Who protects our backs up those funds? No I don't think we need to be easing regulations on another Financial branch of government that will then either screw the consumer over or drive this country into an even greater depression
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    Time to ease regulations on crypto! This is long overdue!
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    Our Federal must not enable another scam "industry". Regulation must be at the lowest level possible. City: best, State: Good Federal: Bad, only for necessary situations. Then, only when All States, Cities agree, voluntary
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    Approach this carefully and thoughtfully. Caution and careful planning on the front end will save in the long run.
    Like (3)
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    Deregulations work against consumers. Anything that lowers the required standards has the potential for adverse effects. We need standards of safety and quality. Trump as a business guy has hurt the country with his deregulations. Worker safety, consumer protection, environment standards should be required.
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