Author: Chamber

Important Step for Industry as FinCEN Incorporates Chamber Position on Travel Rule

by Chamber

Important Step for Industry as FinCEN Incorporates Chamber Position on Travel Rule

Agency Seeks to Clarify through Regulation that the Travel Rule Applies to Virtual Currency Industry, Implying It Did Not Apply Previously

On Friday, October 23, the Financial Crimes Enforcement Network (FinCEN) acknowledged a legal argument we made with respect to the Funds Travel Rule.  We argued that this Rule, as currently written, is specific to legal tender fiat and, in order to apply it to the virtual currency industry, FinCEN must formally amend the Rule.  Last week, FinCEN proposed to amend the Rule through its joint Notice of Proposed Rulemaking (NPRM) with Board of Governors of the Federal Reserve System (the Fed) to “provide clarity concerning the application of the Recordkeeping and Travel Rules.”

The Travel Rule has been a fiery topic for several years now.  It is triggered when a customer wants to transfer $3,000 or more to another account at another financial institution. When that occurs, the financial institution must collect certain information from that customer, including name, account number, and information related to the transaction, among others.  If the customer is a new customer and the transaction is made in person, the institution must also verify the customer’s identity and obtain a taxpayer identification number (such as a social security number).  This can be a point of friction for any organization when onboarding a customer.  (The receiving and intermediary financial institutions have similar obligations.) The Rule also requires that the information be transferred to the receiving institution, which creates a cybersecurity and privacy risk to the customer’s data.

Our argument was a procedural one.  The Rule as written is specific to money, which is defined as “a medium of exchange currently authorized or adopted by a domestic or foreign government.”  While FinCEN amended its regulations in 2011 to apply the money transmitter provisions of the Bank Secrecy Act to virtual currency, it did not do so with respect to the Travel Rule. On November 26, 2019, we wrote to FinCEN to urge them to initiate a notice and comment rulemaking process (such as this NRPM) to fix this discrepancy.

Clearly, the Travel Rule is coming worldwide. Last year, the Financial Action Task Force (FATF) adopted Recommendations related to virtual assets to make that a reality.  Nevertheless, we believed the United States still needed to make the appropriate regulatory adjustments to ensure that the Travel Rule properly applied to our industry. We urged this be corrected so that industry could participate in fashioning a rule that enables compliance and promotes law enforcement objectives, while providing clarity in the application of the Rule moving forward.

In its NRPM, FinCEN highlighted our efforts, acknowledging “that at least one industry group has asserted that the Recordkeeping and Travel Rules do not apply to transactions involving CVC, in part because the group asserts that CVC is not ‘money’ as defined by the rules.” FinCEN has proposed to define the term “money” in the definitions of “payment order” and “transmittal order” (key terms in the Travel Rule) as, “(1) a medium of exchange currently authorized or adopted by a domestic or foreign government, including any digital asset that has legal tender status in any jurisdiction and (2) CVC.”

The effect of this move highlights the fact that application of the Funds Travel Rule was not clear previously – a fact that we laid out in meticulous detail with legal analysis in our November letter.  We are greatly encouraged that FinCEN has taken the necessary steps to correct this and properly apply it through this process.

While this is a significant step for industry, we must recognize that many of the objectives of the Travel Rule still apply under other Bank Secrecy Act (BSA) and Office of Foreign Assets Control (OFAC) compliance regimes.  Under the BSA, you must still understand your customer so that you have a baseline to monitor transactions and effectively report suspicious activity.  Under OFAC, you must know who the counterparties are to your transactions so that you do not violate economic sanctions.  BUT, institutions should not be required to transfer the information to other financial institutions at this time.  Such a result has the practical effect of acknowledging our proposal for a safe harbor to require financial institutions to obtain and retain such information, but not transfer it until a safe and secure transfer system is functional.

In addition, the NPRM also proposes reducing from $3,000 to $250 the threshold in the BSA’s Recordkeeping and Travel Rules for banks and nonbank financial institutions for funds transfers in and out of the United States. We anticipate addressing this proposed change, which is different than the definitional amendments noted above.

Comments on the NPRM are due by Friday, November 27. The Chamber intends to submit a response through its AML Task Force.

Why Every Member of Congress Just Received Bitcoin

by Chamber

Op-Ed by Perianne Boring

Learning by doing is the most effective way to understand something new, especially when it comes to technology. Think of the first time you sent an instant message, downloaded your first app, or set up your first social media account. 

Those simple actions turned theory into reality, and for many of us, the lightbulb went off. Engaging in a cryptocurrency transaction for the first time is the same thing: an inflection point where one discovers the tremendous potential of digital money and blockchain technology. That’s why the Chamber of Digital Commerce’s PAC contributed cryptocurrency to every Member of Congress’ campaign.  

Many Americans have already had their first cryptocurrency transaction and now is the time for political leaders to do the same. A study by Coin Metrics revealed that 15% of American adults – and 27% of Millennials – own some form of cryptocurrency today. In addition, more than 33% of small and medium-size businesses in America now accept cryptocurrencies as payment for goods and services.

Since Bitcoin’s inception in 2009, the idea and promise of blockchain technology has seized the imagination of engineers, scientists and technologists around the world. These nascent and evolving innovations offer immense possibilities for business, government, and consumers. 

While cryptocurrency is another way to pay for something digitally, there much more beneath the surface. Blockchain technology, the essential engine underpinning cryptocurrencies, doesn’t just keep track of financial transactions. It also serves as a timestamp akin to a digital notary, enabling new forms of corporate and social organization, and enhancing transparency and security for transactions around the globe. Blockchain’s open, public ledger technology also enables transactions to be traceable for law enforcement purposes and has been successful in protecting financial systems and the public from bad actors. 

As we have seen with other transformative technologies, whether high-speed broadband or mobile communications – the United States has a unique opportunity to catalyze rapid economic growth, while fostering and encouraging innovation for a new digital tool everyone participating in the global economy can use. 

For that to happen consumers and policymakers alike must understand what cryptocurrency is and is not. Education is the first step for policymakers to come together to develop sound policies that ensure the benefits of the digital economy and blockchain technology are realized in the United States. The best way to do that is to set up a digital wallet and get started on your own blockchain journey. 

According to Marc Andreesen, “The blockchain is the most important technology since the Internet itself,” and it is fundamentally changing every industry in our economy. Blockchain will change the way we engage in politics, campaigns and elections too.

One of the biggest challenges political campaigns face is fundraising. Most Members of Congress spend hours a day on fundraising efforts, oftentimes asking the same pool of long-time supporters for financial support. It’s a necessary, but time-consuming distraction from governing, with an imperfect and unpredictable return on investment. 

Just think of the “first-to-market” benefit past candidates had who embraced websites, email, social media, and yes, online fundraising. These forward-thinkers gained a strategic advantage because of their ability to understand and leverage the new technology before their competitors.  

The United States has one of the lowest rates of youth voter engagement in the world. If politicians want to appeal to younger voters, they need to speak their language and reach them in ways that resonate and are authentic. The 20 million Millennials who hold some form of cryptocurrency today are passionate about this new system of money and are likely to support candidates who embrace its possibilities. 

The more choices people have to give, the more likely they are to support candidates. Digital assets are another option that a growing number of Americans have access to.

Every day, cryptocurrency takes another step toward mainstream use. Investors are allocating more of their portfolios to it, entrepreneurs are pivoting their businesses toward it, and, perhaps most importantly, young people are drawn to it. Adopting cryptocurrency signals to those who believe in it that Members of Congress are in tune with the latest, cutting-edge technology. It also highlights the ease, security and transparency blockchain technology offers.

Perhaps most importantly, for the U.S. to maintain its global leadership, we must remain at the forefront of advanced technologies. Blockchain might soon be considered “critical infrastructure” within the new digital economy. China and the E.U., each has publicly declared they want to be the global leader of developing blockchain technology and have strategic national initiatives well underway. This would be a significant challenge to both our national security and economic security to have foreign actors controlling the systems and governance that will power the digital economy. 

Accepting cryptocurrency campaign contributions is one small yet impactful way Members of Congress can demonstrate their commitment to helping the U.S. maintain its technological leadership, and better understand a technology that will be crucial to their constituents. 

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For more information, visit www.cryptoforcongress.com.

Crypto For Congress Op-Ed

by Chamber

Why Every Member of Congress Just Received Bitcoin

Op-Ed by Perianne Boring, Founder & President, Chamber of Digital Commerce

Learning by doing is the most effective way to learn something new, especially when it comes to technology. Our brains respond and adapt through experiential learning. Think of the first time you sent an instant message, made your first call on a mobile phone, downloaded your first app on a smart phone, or set up your first social media account. Receiving your first cryptocurrency is a teachable moment. 

Many Americans have already experienced their first digital currency transaction and are rapidly embracing the technology.  According to a study by Coin Metrics, 15% of all American adults – and 27% of Millennials – own some form of cryptocurrency. In addition, more than 33%. of small and medium-size businesses in America are now accepting cryptocurrencies as payment for goods and services.

Since Bitcoin’s inception in 2009, the idea and promise of blockchain technology has seized the imagination of engineers, scientists and technologists around the world. These nascent and evolving innovations offer immense possibilities for business, government, and consumers. The United States has a unique opportunity to catalyze rapid economic growth, while fostering and encouraging innovation towards a new digital economy for the whole world to use.

Elected officials alike must understand that the United States’ technical preeminence is at risk if we fail to acknowledge the role blockchain technology will play in the global economy for many generations to come, similar to the Internet. Technology providers estimate that 10 percent of global GDP will likely be stored on blockchain technology by 2025 to 2027.     

Education is the first step we must take to bring policymakers together to gain widespread support for a successful path forward for digital assets and ensure the benefits of blockchain technology are realized in the United States.   The Chamber of Digital Commerce exists in part to offer education and hands-on learning to Members of Congress that will empower them to receive and send cryptocurrencies and use blockchain technology.

While cryptocurrency is another way to pay for something digitally, there  is much, much more going on beneath the surface. Blockchain technology, the technology underpinning cryptocurrencies, doesn’t just keep track of financial transactions, it can also serve as a timestamping method akin to a digital notary, enabling new forms of corporate and social organization, and improving the way we transact digitally.  

Additionally, blockchain’s open, public ledger technology enables transactions to be traceable for law enforcement purposes and has been successful in protecting financial systems and the public from bad actors. 

Today, many small and medium-sized businesses accept cryptocurrency as payment for goods and services. It’s time for Congressional campaigns to do the same.

One of the biggest challenges campaigns face is fundraising. Most Members of Congress spend hours a day on fundraising efforts alone, oftentimes asking the same pool of long-time supporters for ever more money. It’s a necessary, but time-consuming distraction from governing, with an imperfect and unpredictable return on investment.

Just think of the ‘first-to-market’ benefit past candidates had who embraced websites, email, and social media. These forward-thinkers gained a strategic advantage because of their ability to understand and leverage the new technology before their competitors.

The United States has one of the lowest rates of youth voter turnout in the world. If politicians want to appeal to younger voters, they need to speak their language and reach them in ways that resonate.  More than 89 million Millennials who hold some form of cryptocurrency today are passionate about this new system of money and are likely to support candidates who embrace its possibilities.

Just as campaigns use social media to target different demographics, campaigns rely on a variety of different payment methods to solicit donations from different communities. Imagine if campaigns told direct mail donors that they could give only by credit card, or donors over the phone they had to go to a website. If you don’t let donors give and engage how they want to, they won’t.

Every day, cryptocurrency takes another step toward mainstream use. Investors are allocating more of their portfolios to it, entrepreneurs are pivoting their businesses towards it, and, perhaps most importantly, young people are drawn to it. Embracing cryptocurrency signals to those who believe in it that Members of Congress are in tune with the latest, cutting-edge technology.

Perhaps most importantly, for the U.S. to maintain its global leadership, we must remain at the forefront of advanced technologies. Blockchain might soon be considered ‘critical infrastructure’ within the new digital economy. China and the E.U. understand this and are already well ahead of the curve. Separately, each has publicly declared they want to be the global leader of developing blockchain technology and have strategic national initiatives underway. This would be a significant challenge to both our national security and economic security to have foreign actors controlling the systems and governance that will power the digital economy. 

Accepting cryptocurrency campaign contributions is one small yet impactful way Members of Congress can demonstrate their commitment to helping the U.S. maintain its technological leadership.

We at the Chamber are ready to help all Members who are ready to learn about blockchain technology and better understand its enormous potential for innovation and economic growth.

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Perianne Boring is the Founder and President of the Chamber of Digital Commerce, the largest trade association dedicated to supporting the blockchain industry and educating policymakers on how the technology works while addressing regulatory concerns.

Crypto for Congress Educational Initiative Launches Today

by Chamber

Crypto for Congress Educational Initiative
Launches Today

Enables All Members of Congress to Interact with Blockchain Technology

WASHINGTON, D.C. (October 5, 2020) – Today, all Members of the United States Congress will receive a campaign contribution in bitcoin as part of a groundbreaking initiative called “Crypto for Congress.” This milestone marks the first time every Member of Congress will have the opportunity to interact with and fully realize the potential of blockchain technology.

As with all technologies, the deepest form of learning happens when someone uses it for themselves. In addition to the $50 bitcoin contribution from the Chamber of Digital Commerce PAC, the Chamber of Digital Commerce is providing extensive public online educational training, a toolkit, and resources to Members across all parties to help them engage directly in the cryptocurrency ecosystem.

Crypto for Congress is a pivotal inflection point, akin to the time Members of Congress received their first email or sent their first Tweet. It will foster a deeper understanding of this technology’s vast potential, from enabling greater participation in the political process to revolutionizing every industry in our economy.

“Now is the moment for all Members of Congress to learn about and embrace cryptocurrencies and blockchain technology, and the best way to do that is to set up a digital wallet and get started on the blockchain journey,” said Perianne Boring, Founder and President of the Chamber of Digital Commerce.  “Many other nations like China, Japan, Singapore and Switzerland have rapidly embraced blockchain technology and created robust national plans to be global leaders in this area. The United States is falling behind in technological innovation and this is not a risk we should be willing to take,” she said.

The Crypto for Congress initiative is supported by members of the Congressional Blockchain Caucus including pro-cryptocurrency Representatives Darren Soto and Tom Emmer.

U.S. Rep. Tom Emmer said, “The lightbulb moment is now. Crypto for Congress brings an opportunity for our entire Congressional community to join this generational shift in finance and technology. By embracing the digital asset movement, we have an opportunity to take a significant step forward to ensure America’s leadership position in the future of the global economy.”

U.S. Rep. Darren Soto said, “As lawmakers, it’s our duty to ensure the United States leads in blockchain technology. Understanding how this technology works at a hands-on level is an important step we must take to promote innovation and maximize the potential of cryptocurrencies for the U.S. economy.”

Crypto for Congress is sponsored by a consortium of leading companies in the digital asset industry, including Anchorage, Armanino, BitPay, BlockFi, Bloq, CMT Digital, Circle, Civic, Core Scientific, eToro, Flipside Crypto, Hedera Hashgraph, Medici Ventures, Messari and Paxos.

 

About Crypto for Congress: Crypto for Congress is an educational initiative of the Chamber of Digital Commerce that seeks to provide Congressional candidates, regardless of party, a hands-on experience with blockchain technology. The purpose of Crypto for Congress is to raise awareness of and expand access to blockchain technology, while broadening participation in the political process. Visit www.cryptoforcongress.com to learn more.

About Chamber of Digital Commerce: The Chamber of Digital Commerce is the world’s leading trade association representing the digital asset and blockchain industry. It supports the operation of the Chamber of Digital Commerce PAC in accordance with federal law. Visit www.digitalchamber.org to learn more.

Deliberations on the Digital Dollar: A Letter to the Digital Dollar Project Regarding its Proposal for the United States to Develop a CBDC

by Chamber

Deliberations on the Digital Dollar:
A Letter to the Digital Dollar Project Regarding its Proposal for the United States to Develop a CBDC

On Friday, the Chamber of Digital Commerce sent a letter to the Digital Dollar Project regarding its whitepaper promoting the development of a U.S. central bank-issued digital currency (CBDC).

Our letter, developed carefully by the Chamber’s diverse membership including companies that would be instrumental in designing, creating, distributing, and promoting the implementation and use of the digital dollar, underscores why the development of a U.S. CBDC must be deliberate for it to be successful, as the impact of this Project will shape the U.S. and global financial services landscape.  It highlights important considerations that will be fundamental in determining the digital dollar’s success, thoughtfully examining how a U.S. CBDC will facilitate, for example, access to financial services and enhance AML compliance while balancing privacy objectives. Importantly, the letter identifies areas within the financial system that can benefit the most from this Project, noting areas that are ripe for pilot programs to test the digital dollar’s use.

The development of a tokenized digital dollar promotes the need to modernize the United States’ payments infrastructure, combining the benefits of distributed ledger technology (DLT) enabled payments, such as increased settlement speed and decreased transaction costs, with the U.S dollar, the world’s reserve currency. In addition to contemplating the potential impact of the digital dollar, we encourage the Digital Dollar Project to work with government and industry on testing CBDC prototypes in a series of pilot programs. This need is urgent given the extraordinary developments across the globe, including the imminent launch of China’s digital yuan and efforts underway within the European Union and many other central banks, and the issues noted in the whitepaper and our letter deserve careful analysis.

We are thankful to DLx Law, in particular, Lewis Cohen, Angela Angelovska-Wilson, and Greg Strong, for their insights and expertise in responding to this important and timely Project.

What Cryptocurrency Is… And Is Not

by Chamber

Cryptocurrencies have been around for more than a decade and adoption has steadily increased. As with any popular, emerging technology, questions and misconceptions remain among the media, public, and even policy makers. So here is a quick primer:

Cryptocurrencies are digital assets that enable novel and more efficient ways to send and store value online; they can be another option for payment, similar to credit cards, Apple Pay, PayPal, or Venmo. You can pay for goods and services with cryptocurrency from businesses such as AT&T, Microsoft, and Overstock, or you can trade it just as you would a currency or commodity.

Cryptocurrency transactions are recorded on a blockchain or its equivalent technologies, more broadly defined as distributed ledger technology (DLT). Think of it as a spreadsheet that records debits and credits between accounts, similar to bank statements, except the ledger is viewable publicly to promote transparency and each transaction is encrypted so it is resistant to tampering.  

1. Cryptocurrencies are safe and secure because they are decentralized, distributed, and use cryptography. 

Cryptocurrency transactions are safe and secure through the use of cryptography distributed across multiple computers globally, allowing for enhanced cyber resiliency. As a result, hacking one computer in the network will not prevent the ledger of transactions from being altered. The use of consensus mechanisms to validate transactions also helps prevent cyber actors from manipulating data stored on the cryptocurrency’s blockchain. Even if a breach were to occur, the changes would be publicly viewable. 

To read up on how DLT can help increase cyber resiliency, see our report: Advancing Blockchain Cybersecurity: Technical and Policy Considerations for the Financial Services Industry. See also, the Considerations and Guidelines for Advancing Cybersecurity in the Token Economy Chapter II, Section D (starting at page 107) in our report series Understanding Digital Tokens.

2. Cryptocurrency transactions are auditable. 

Cryptocurrencies enable the movement of digital assets from one person to another and can be traced through tamper-resistant DLT.  These transactions are publicly auditable, which means that law enforcement officials are able to view the information through the use of blockchain analytics software.  A recent example of the Bitcoin blockchain’s use in aiding law enforcement is the 2020 Twitter Hack  where blockchain analytics helped track down the hackers who engaged in a “giveaway scam.”

For more information on how blockchain technology enables transparency and traceability, see Elliptic: Bitcoin Is Not Anonymous. See also Chainalysis: How Our Cryptocurrency Transaction Monitoring Evolved in 2018.

3. Cryptocurrencies transactions are regulated.

How a cryptocurrency transaction is regulated depends on its use. While regulation is typically applied based on the facts and circumstances of the business platform and transaction, generally speaking, cryptocurrencies that are transferred through an intermediary are regulated by the Department of Treasury’s Financial Crimes Enforcement Network and state banking departments. Cryptocurrencies offered through derivatives, swaps, and options are regulated by the Commodity Futures Trading Commission. The Securities and Exchange Commission has jurisdiction over those that are securities. In addition, the Federal Trade Commission has brought actions for unfair and deceptive acts and practices. Companies need to be cognizant that many laws can apply to transactions just as they would for any other business. 

The Chamber and its Members take compliance seriously. Our report series, Understanding Digital Tokens, covers a broad range of digital token regulations in the United States, the United Kingdom, Canada, Australia, Gibraltar, and Japan (starting at page 145).

4. Cryptocurrencies are becoming a well-established financial tool. 

Cryptocurrency use is growing: almost 30% of Millennials and 15% of Americans have adopted digital currencies, which can be used to pay for goods and services from businesses such as Microsoft and Overstock, or to trade just as any othercurrency or commodity. Further, roughly 33% of U.S. businesses large and small accept cryptocurrency for payments. 

To see a more comprehensive breakdown of the demographics that use bitcoin, check out  Blockchain Capital’s report: Bitcoin is a Demographic Mega-Trend: Data Analysis.

You should also check out a recent report regarding bitcoin’s adoption in Forbes: The Coronavirus Cryptocurrency Craze: Who’s Behind The Bitcoin Buying Binge?

Find out more about the businesses that are accepting bitcoin for payments in the HSB Survey: One-Third of Small Businesses Accept Cryptocurrency.

5. The United States must continue to take a leading role in encouraging an innovative cryptocurrency marketplace.   

For the United States to maintain its global leadership in advanced technologies, we must encourage the development of blockchain technology. Given its global implications, blockchain might soon be considered “critical infrastructure” within the new digital economy. China and the European Union understand this and already are well ahead of the curve through initiatives to develop central bank-issued digital currencies. Separately, each has publicly declared they want to be the global leader in blockchain technology and have strategic national initiatives underway. This could enable foreign actors to control the development and standards of systems and governance of technology that will power the digital economy.  Such advances would present a significant challenge to both our national and economic security. 

The Chamber is calling for a National Action Plan for Blockchain, discussing the urgent need for the United States to invest in U.S. blockchain development or risk losing our competitive edge.

Congressmen Introduce Legislation Promoting Growth of Digital Token Business in the United States

by Chamber

Congressmen Introduce Legislation Promoting Growth of Digital Token Business in the United States

Today, Rep. Tom Emmer (R-MN), Co-chair of the Congressional Blockchain Caucus and Ranking Member of the House Committee on Financial Services’ FinTech Task Force, introduced the Securities Clarity Act of 2020, which proposes amending federal securities laws to distinguish between investment assets that are part of an investment contract and securities. Simultaneously, Ranking Member Mike Conaway (R-TX), House Committee on Agriculture, introduced the Digital Commodity Exchange Act of 2020 (the DCEA), which proposes developing a federal framework for the prudential regulation of token trading platforms, among other things, under the CFTC’s supervision. The bills are intended to work in tandem to promote the growth of digital tokens and blockchain development in the United States by tackling challenges blockchain innovators are facing from different angles. Each bill is discussed in further detail below. Given its length and complexity, the Chamber has also developed a detailed summary of the DCEA.

Securities Clarity Act of 2020

One of the biggest issues impacting our industry today is whether digital tokens issued as part of investment contracts are themselves securities.  This is a legal issue promoted in our amicus brief in the case SEC v. Telegram – that digital tokens that are a part of an investment contract are not necessarily themselves “securities” under the federal securities laws.  The Securities Clarity Act amends the securities laws to make this clarification law by:  

  • creating a new term, “investment contract asset,” and excluding it from the definition of security; and
  • defining “investment contract asset” as “an asset, whether tangible or intangible, including assets in digital form sold or otherwise transferred, or intended to be sold or otherwise transferred, pursuant to an investment contract; and that is not otherwise a security….” 

In other words, digital tokens should not be deemed securities solely because they are the object or subject of an investment contract.  It is critical that digital tokens have their own legal analysis as to whether they are securities, and we support this effort to make that a reality.

Lewis Cohen, Co-founder of Chamber Member DLx Law, noted that the uncertain legal status of many digital assets hampers the growth of the infrastructure needed to facilitate the use of these assets for their intended purpose.  Cohen commented, “This bill would bring the U.S. into greater alignment with the regulatory approach taken in other major jurisdictions and will foster the development of blockchain technology here without compromising on investor protection when actual securities are sold or traded.”

“The Digital Chamber has been convening discussions on securities proposals like this among Members of Congress and industry stakeholders for years. Their input on this proposal and many others are vital to advancing support for emerging technologies and making sure they have a home here in the United States.” – Congressman Tom Emmer

Digital Commodity Exchange Act of 2020

Another major challenge the industry faces is the current multi-faceted licensing regime. For example, to operate nationally, token trading platforms must obtain money transmission licenses in each state they wish to do business, a tedious and costly process. 

The DCEA seeks to reduce barriers for token trading platforms by supporting three primary objectives:

  • permitting token trading platforms, referred to as “digital commodity exchanges” or “DCEs,” to be supervised by the CFTC under a voluntary registration scheme, allowing DCEs to offer services nationally without obtaining a money transmission license in each state;
  • enabling trading of certain digital tokens offered as part of an investment contract “presale” by allowing CFTC-registered DCEs to list “presale” tokens that are not securities; and
  • creating a regulatory framework for DCEs to trade leveraged, financed, or margined transactions (“retail commodity transactions”) and gives the CFTC discretion to develop rules related to disclosure; recordkeeping; capital and margin; other financial resources; reporting; business conduct; and documentation for these activities.

With over two dozen members who are money transmitters, CFTC-regulated entities, or both, the Chamber has extensively considered the impact of the DCEA on state-regulated money transmitters as well as federally regulated DCMs, SEFs, and DCOs. We support efforts to streamline and refine the regulation of money transmitters, including token trading platforms, to bring them more in line with 20th century digital realities.  Creating such a structure requires careful consideration to create a workable solution for both money transmitters as well as CFTC-regulated entities, which operate within a complex regulatory framework. As such, the Chamber remains interested in further exploring the details around the integration of this legislation into the regulated commodities marketplace while solving the complex yet limited state-by-state licensing regime.

Chamber of Digital Commerce Welcomes Mick Mulvaney to Board of Advisors and Adds Goldman Sachs, Six Digital Exchange (SDX), & Visa to its Executive Committee

by Chamber

Chamber of Digital Commerce Welcomes Mick Mulvaney to Board of Advisors and Adds Goldman Sachs, SIX Digital Exchange (SDX), & Visa to its Executive Committee

September 23, 2020

WASHINGTON, D.C., September 23, 2020 – The Chamber of Digital Commerce – the world’s leading blockchain trade association, today announced the addition of Mick Mulvaney, former Acting White House Chief of Staff and Congressional Blockchain Caucus co-founder to its Board of Advisors. In addition, the organization welcomed Goldman Sachs, SIX Digital Exchange (SDX), and Visa to its Executive Committee membership.

“As blockchain innovation and investment continues to drive policy decisions affecting the industry, diverse leadership with private and public-serving experience is needed to assure the future of blockchain in the United States,” said Perianne Boring, Founder and President of the Chamber of Digital Commerce. “Collaborative action driving blockchain adoption is at the heart of our organization’s mission. Uniting Mick Mulvaney’s exceptional government experience alongside the powerful innovative nature of Goldman Sachs, SIX Digital Exchange (SDX) and Visa, the Chamber believes it has significantly strengthened its already accomplished membership and is best positioned as the voice of the blockchain industry.”

“The Chamber of Digital Commerce has long been a voice on Capitol Hill advocating for the adoption of blockchain technologies,” said Mick Mulvaney. “I’m excited to join this passionate team of leaders on their mission to foster industry-beneficial policy and regulatory initiatives for the blockchain ecosystem. As a co-founder of the Congressional Blockchain Caucus, I believe U.S. advancement of blockchain development and policy is crucial to our continued success as a global leader in technological evolution.”

“Blockchain technology represents a clear and significant advancement in how we do financial services work,” said Mathew Mcdermott, Global Head of Digital Assets, Goldman Sachs. “Goldman Sachs recognizes the importance of blockchain technology and its continued adoption. The Chamber of Digital Commerce Executive Committee gives us the opportunity to collaborate with the industry’s strongest innovators, enterprise companies, and government partners to help progress the future of financial services.”

“As SDX aims to launch the world’s first regulated institutional end-to-end digital asset exchange and CSD, we are delighted to bring our industry experience and perspective to the Chamber’s membership as an Executive Committee Member,” said Tim Grant, Chief Executive Oficer, SIX Digital Exchange (SDX). “The Chamber of Digital Commerce has become a strong voice for the financial services industry as we navigate the advances in distributed ledger technology in the context of global regulatory policy. We look forward to collaborating with the membership on the many challenges our industry faces and accelerate the adoption of blockchain technology and digital assets.”

“Visa continuously explores new payment innovations like digital currencies and how they might be able to connect to or expand our existing network and products.,” said Cuy Sheffield, Head of Crypto at Visa. “We look forward to working alongside the Chamber of Digital Commerce and its robust membership to bring our company’s perspective to the table regarding blockchain policy and adoption.”

 

About the Chamber of Digital Commerce

Headquartered in Washington, DC, the Chamber of Digital Commerce is the world’s first and largest trade association representing the digital asset and blockchain industry. For more information, please visit: DigitalChamber.org, and follow us on Twitter: @DigitalChamber.

Chamber Media Contact:

Ethan Brady
+1 202-765-3105
ethan@digitalchamber.org

Energy and Commerce Committee Clears U.S. Blockchain Development Legislation, Congressman Discusses Plans for Blockchain Office in Commerce Department

by Chamber

Energy and Commerce Committee Clears U.S. Blockchain Development Legislation, Congressman Discusses Plans for Blockchain Office in Commerce Department

Congress is making progress in establishing U.S. leadership in blockchain innovation. Last week, at a markup held by the House Committee on Energy and Commerce, Rep. Darren Soto (D-FL), Co-Chair of the Congressional Blockchain Caucus, revealed he is working towards establishing within the Department of Commerce a Blockchain Center for Excellence, an office presumably dedicated to advancing blockchain innovation in U.S. commerce.  The Committee on Energy and Commerce also passed two bills promoting U.S. competitiveness in blockchain technology, marking a shift in how Congress is looking at U.S. blockchain development. The Chamber celebrates these milestones as a step towards building a national strategy to advance U.S. competitiveness in blockchain technology development. Almost two years ago, the Chamber called for a National Action Plan for Blockchain, proposing that the United States government approach blockchain technology with clearly articulated support to encourage private sector development and innovation, so we are pleased to see this legislation will be considered by the House.

The Blockchain Center of Excellence

The United States needs a coordinated approach to be a leader in the adoption and promotion of blockchain technology, and an office housed within the Department of Commerce could serve as a facilitator between the public and private sectors. Establishing an office to promote  U.S. blockchain innovation is a cornerstone of our National Action Plan for Blockchain, and we look forward to working with Congressman Soto to share our perspectives on how this office can support blockchain companies innovating in the United States and attract innovators who have relocated to more predictable legal environments overseas.

Legislation Supporting U.S. Blockchain Development

The Committee passed H.R. 8132: The American COMPETE Act, which calls for a national strategy on U.S. blockchain development and legislative recommendations to expedite blockchain technology adoption in the United States. As we’ve said before, the potential promise of blockchain technology will not be realized in the United States without the widespread support of policymakers. The Committee also passed an amended version of H.R. 8128: AI for Consumer Product Safety Act, incorporating two bills previously introduced by Rep. Soto: H.R. 8153, the Blockchain Innovation Act, and H.R. 2154, the Digital Taxonomy Act. In addition to establishing a pilot program to test the use of artificial intelligence in consumer product safety, the legislation now calls for a study to examine how blockchain can be used to protect consumers and an annual report by the Federal Trade Commission (FTC) on fraudulent actions related to digital tokens. Notably, the legislation requires an assessment by the Department of Commerce of federal regulations where greater regulatory clarity is needed to promote blockchain innovation in the United States.  This, of course, is an issue that greatly impacts many in our industry, and we encourage those agencies to look to industry for important feedback on these issues.

It’s a significant development that Members of Congress are championing the key components of our National Action Plan for Blockchain, and it will be important for the United States to maintain its stature as the premier location for technology, innovation, and entrepreneurship.

Bill summaries for the American COMPETE Act, Blockchain Innovation Act, and Digital Taxonomy Act are available below.

H.R. 8132: The American COMPETE Act

  • The American COMPETE Act is a package of legislation that focuses on U.S. competitiveness in AI, Internet of Things (IoT) in manufacturing, quantum computing, blockchain, new and advanced materials, unmanned delivery services, IoT, 3D printing, and use of AI in combating online harms.
  • The Study to Advance Blockchain Technology directs the Secretary of Commerce and Federal Trade Commission to conduct a survey on the blockchain industry and potential risks and submit a report to Congress on its findings.
  • The study focuses on two primary areas: 1) industry use and adoption; and 2) blockchain marketplace/supply chain risks.
  • The study must be completed within 1 year of the bill’s passage, and the report must be submitted to the House and Senate Commerce Committees 6 months following the study’s completion.

H.R. 8153: Blockchain Innovation Act

  • Directs the Secretary of Commerce, in consultation with the Federal Trade Commission (FTC), to study and report to Congress on the use of blockchain technology in commerce and its benefits in preventing fraud.
  • The study focuses on several areas: 1) commercial activity and investment; 2) fostering public-private partnerships; 3) the benefits and challenges of using blockchain technology for consumer protection, including preventing fraud and securing transactions; 4) areas in federal regulation where greater clarity is needed to promote innovation in the United States; and 5) additional observations and policy recommendations.
  • The study also includes a public comment period to collect feedback from industry.
  • The report must be submitted within 6 months of the study’s completion to House Energy and Commerce and Senate Commerce Committees and made available to the public through the Department of Commerce’s website.

H.R. 2154: Digital Taxonomy Act (Amended Version Incorporated within H.R. 8128)

  • Directs the FTC to report to Congress annually on actions related to consumer protection and digital tokens.
  • The FTC must report on regulatory actions and other efforts related to digital tokens and consumer protection through its authority to prevent unfair or deceptive acts or practices (UDAP) as well as legislative recommendations.

 

Members of Congress Urge U.S. to Lead in Development of Blockchain Technology for Relief Efforts

by Chamber

Members of Congress Urge U.S. to Lead in Development of Blockchain Technology for Relief Efforts

Today’s letter from Members of the Congressional Blockchain Caucus demonstrates just how urgent it is for the United States to have a coordinated plan for developing, supporting, and using blockchain technology.  We are proud to have supported Congressman Emmer and the Caucus in continuing to bring more urgency to this issue.

 

Highlighting its potential use in managing identity, supply chains, and credentialing, the letter, led by Congressional Blockchain Caucus Co-chairs Reps. Tom Emmer (R-MN), Bill Foster (D-IL), David Schweikert (R-AZ), and Darren Soto (D-FL), urges the Administration to convene leaders from the public and private sectors to meet and develop a strategy effectuating use of blockchain technology in relief efforts.  We appreciate the leadership of Congressman Tom Emmer and the Congressional Blockchain Caucus in showing how a national strategy for blockchain would support the United States and enhance resilience in our economy, digital infrastructure, and public health system.

“The Chamber of Digital Commerce has led the way with their National Action Plan for Blockchain, and the Congressional Blockchain Caucus has found a deep partnership with this important organization. This letter stands for our shared principles and goals. We must encourage the private sector in America to develop these technologies, and the public sector to explore its potential uses. When a crisis forms like the Coronavirus outbreak, blockchain can be an answer to many of the problems we face. This letter urges the administration to have each agency explore how blockchain can help combat the coronavirus outbreak. The Blockchain Caucus is grateful for our partnership with the Chamber of Digital Commerce and will continue to push for increased federal exploration of blockchain technology in addressing many of America’s challenges.” – Congressman Tom Emmer

This is not the first time Members of Congress have come together to urge the Administration to proactively utilize blockchain technology. Last year, the Co-chairs of the Congressional Blockchain Caucus wrote to the Administration requesting that it facilitate a forum for government and business leaders to meet and discuss how a national strategy for blockchain can transform commerce, government services, public health, and our digital infrastructure.   Had such a forum been convened, it could have been useful in addressing the circumstances we face today.  And just three months ago, members of the Caucus again wrote to Secretary Mnuchin, urging consideration of blockchain technology for use in aid distribution.

The time is now to develop a strategic plan to support and promote the use of this technology.  Other nations – China, the European Union, India, Australia, Singapore, and the United Arab Emirates, to name a few – are already using this model framework for their own purposes. The United States is at risk of being eclipsed in the next wave of global technological development.

Government and industry must work together to support the development of this technology and coordinate U.S. blockchain strategy, through a designated office or otherwise, to play a pivotal role in identifying both areas of opportunity to deploy blockchain technology as well as areas of friction in policies and laws that are keeping us from realizing this technology’s full potential.