US Bill Seeks to Mandate Reporting of Off-Chain Crypto Transactions to Government
Summary:
A new bill titled "Off-Chain Digital Commodity Transaction Reporting Act" has been introduced by U.S. Democrat Representative Don Beyer. The bill seeks to mandate crypto providers to submit all off-chain transactions to a government-controlled repository within 24 hours. This move is aimed at safeguarding investors from potential fraud and manipulation and to enhance transparency in the digital asset market. The proposed regulations resemble those for securities and swaps transactions.
The United States is considering a new proposal aimed at obliging cryptocurrency service providers to submit all blockchain-related transactions to a government-owned repository. Democrat Representative Don Beyer tabled the "Off-Chain Digital Commodity Transaction Reporting Act" on Sept. 28, instructing digital trading outlets to provide transaction details to a repository overseen by the Commodity Futures Trading Commission (CFTC).
The objective of this proposed law is to safeguard crypto investors from potential controversies, deception, or fraudulent transactions originating from off-chain practices, those that occur beyond the limits of the blockchain network. Unlike on-chain transactions, those made off-chain are not immediately recorded on a blockchain but are facilitated through subsidiary layers, which poses challenges in terms of tracking and tracing.
An increase in digital trading platforms and the aspiration to enhance transaction speeds while reducing costs have led to many transactions made "off-chain," without being recorded on the public blockchain, as per the news release.
"Unfortunately, the diverse internal record-keeping protocols among these private firms can lead to fraud and market manipulation, leaving investors and consumers exposed," noted Beyer, further stating: "This proposed law is a rational strategy to bring back transparency and assurance to the digital asset marketplace."
The proposed law will, if passed, necessitate crypto service providers to report all off-chain transactions to a CFTC-supported trade repository within 24 hours. The news release made it clear that these proposed requirements parallel the regulations for practically all securities and swaps transactions.
Recent times have seen US lawmakers pay increasing attention to regulations in the cryptocurrency sector. Just last month, nine US Senators supported Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act, which was re-proposed in July 2023. The current version of the legislation is designed to regulate noncustodial digital wallets and extend obligations as per the Bank Secrecy Act, among other legal actions aimed at thwarting illicit uses of digital currency.
Published At
9/29/2023 9:21:02 AM
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