Today, the Blockchain Association submitted a comment letter urging the Department of Treasury (Treasury) to extend the comment period for its notice of proposed rulemaking (NPRM) entitled “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets.” In addition to the comment letter, the Association’s counsel, former Solicitor General Paul Clement, sent a letter to Secretary Mnuchin requesting a deadline extension.
In its comment, the Association argues both that the NPRM is procedurally defective and that Treasury should extend the comment period for the NPRM to at least 60 days so that the public can provide substantive and meaningful feedback. …
With the SEC ending its long battle with Kik, the Blockchain Association is optimistic about the ability of the crypto industry to move forward and continue innovating.
The SEC and Kik settled their yearlong lawsuit this fall, following a summary judgment decision by a district court in New York. Kik agreed to pay a $5 million fine and to notify the SEC in advance of certain activities. …
On Friday, the Blockchain Association responded to the Financial Crimes Enforcement Network and the Federal Reserve’s notice of proposed rulemaking (NPRM) that would lower the Travel and Recordkeeping rules’ compliance thresholds to $250 for transactions involving non-U.S. jurisdictions. The Association urged the agencies to reconsider this NPRM, the adoption of which would place a substantial burden on regulated financial institutions — especially virtual asset service providers and smaller firms — while undermining individual users’ privacy.
In addition, the Association maintained that the agencies did not provide sufficient evidence that adopting the proposed changes would materially benefit anti-money laundering or combatting the financing of terrorism enforcement relative to the significant costs it would impose on the public. …
Today, the Blockchain Association published a report for policymakers that explains the fundamental role of self-hosted wallets in the cryptocurrency ecosystem and why they are important to the future of free societies. The report is divided into two sections: The first section describes what self-hosted wallets are, their role in the digital asset ecosystem, and the current regulatory framework for managing digital asset transactions involving self-hosted wallets. The second section argues that imposing restrictions on individuals’ ability to use self-hosted wallets would be misguided.
Self-hosted wallets allow individuals to engage in transactions over the internet on a peer-to-peer basis, meaning that no other individuals or entities are parties to the transaction. Peer-to-peer transactions over the internet were impossible before the advent of the first cryptocurrency, and — as is explored throughout the paper — this seemingly straightforward innovation has widespread, profound, and exciting implications for policymaking and society. The ability to “cut out the middleman” in digital transactions creates a new paradigm for individuals, policymakers, and law enforcement alike because traditional digital financial transactions necessarily involve regulated intermediaries. …
How Filecoin helps make the case for cryptocurrencies in Washington, D.C.
Recent government antitrust action against Google highlights what many in the tech world feel: certain companies have much too much control over how we conduct our business online. Sometimes this concern is mitigated by focusing on the benefits of Big Tech’s growing power: cost, ease of use, and lessening the cognitive burden of consumers. And whereas the U.S. government has recently taken a long-anticipated step towards questioning the power of Google (and perhaps other big companies, in the future), this action may take years to filter down to the lives of the everyday consumer. However, there are projects, particularly in the blockchain economy, that may offer more ready antidotes to some of the power accrued by these tech giants. One such project is Filecoin, a network that aims to be the next-generation marketplace for data storage and retrieval. …
Depending on the proof-of-stake network, individuals staking their stokens (“stakers”) may (1) stake their own tokens; (2) delegate their right to validate transactions while keeping custody of the tokens; or (3) both delegate this right and transfer custody of the tokens for staking. Validating new transaction blocks earns stakers rewards in the form of created tokens. Delegating is meant to increase member participation by allowing for specialized services, known as staking service providers, to perform the staking function on behalf of individuals. …
The Blockchain Association applauds the introduction of the bipartisan Digital Commodity Exchange Act and the Securities Clarity Act, led by Republicans Rep. Tom Emmer and Rep. Mike Conaway and Democrat Rep. Darren Soto. These bills address two fundamental questions regarding the regulation of digital assets: “When do the securities laws apply to digital assets?” and “How will digital assets be regulated when the securities laws don’t apply?”
Securities Clarity Act
In order to clarify when the securities laws apply, Rep. Tom Emmer and others have introduced the Securities Clarity Act. The introduction of this bill is timely given the recent SEC cases against two companies, Telegram and Kik Interactive. The SEC’s arguments in these cases conflated pre-sale investment contracts and tokens. The Securities Clarity Act attempts to resolve this ruling by maintaining that these tokens, which the bill considers to be “investment contract assets,” are not securities. …
Today, the Blockchain Association responded to a Federal Deposit Insurance Corporation (FDIC) request for information (RFI). In its response, the Association argues that creating a voluntary certification model for third-party providers of innovative services, including cryptocurrency-related services, would promote innovation, transparency, and inclusivity within the U.S. banking system.
Banks of all sizes regularly partner with third-parties to provide services to their customers, but compared to their larger counterparts, small financial institutions like community banks have long struggled to bear regulatory costs while remaining competitive, a situation that has increased concentration within the banking system over the last several decades. …
“Digital securities” are distributed ledger-based representations of value that have the underlying characteristics of traditional securities and are subject to regulation under U.S. securities laws. Transactions involving such digital securities must comply with the securities laws and regulations, just like any security in the United States. As we have written before, digital securities have the potential to create more inclusive and efficient financial markets, yet regulations not designed to address distributed ledger-based systems are impeding the use and adoption of digital securities. …
The Blockchain Association submitted a comment letter in response to the Office of the Comptroller of the Currency’s (OCC) advanced notice of proposed rulemaking regarding national bank and federal savings association digital activities. The Association welcomes the OCC’s focus on ensuring the federal banking system continues to serve its customers effectively and remains responsive to innovation.
As the OCC notes, the business of banking is not static. The National Bank Act established the federal banking system in the 1860s, well before the advent of technologies that have fundamentally changed the business of banking such as credit cards, electronic record keeping, digital payments, and mobile banking. …
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