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Big News for Blockchain Policy:
U.S. Congressmen Support Blockchain Innovation & Regulatory Clarity

October 3, 2018

Big News for Blockchain Policy: U.S. Congressmen Support Blockchain Innovation & Regulatory Clarity

By Chamber of Digital Commerce

Last week garnered unprecedented support for blockchain technology in the U.S. Congress, with significant progress in growing the Blockchain Caucus leadership and in taking steps to clarify the laws impacting use of the technology. Specifically, two resolutions were introduced to foster broad support for light touch regulation of blockchain and digital currency activity. Three bills were proposed to help alleviate uncertainty surrounding application of certain tax treatment, exclusions from money transmitter registration and licensing, and clarification around smart contracts.  Finally, 15 Members of Congress wrote to SEC Chairman Jay Clayton requesting further clarification on the treatment of digital tokens under securities laws.

These Congressional efforts (below) demonstrate that education and advocacy is creating true blockchain champions in government and is broadening the understanding and determination of more Members of Congress to promote real policy solutions for our industry. But, more needs to be done. We continue to advocate in Washington, DC and beyond to ensure that this momentum translates into the implementation of blockchain-friendly policies for industry.

The Latest Blockchain Developments from Capitol Hill:

 

    • The leadership of the Congressional Blockchain Caucus is growing. Bill Foster (D-IL) and Rep. Tom Emmer (R-MN) have joined Rep. David Schweikert (R-AZ) and Rep. Jared Polis (D-CO) as co-chairs of the Caucus.  We look forward to more visionary support from these leaders in the coming months.
      • Tom Emmer introduced three pieces of legislation: (1) H. Res. 1102, a resolution that supports blockchain and digital currencies; (2) H.R. 6974, a bill clarifying that certain non-controlling service providers are exempt from federal money transmitter licensing and registration requirements; and (3) H.R. 6973, a bill protecting taxpayers who have received forked convertible virtual currency from IRS penalties until the IRS can provide clearer guidance on these types of gains. Congressman Emmer is clearly making strides in his new role as a co-chair of the Congressional Blockchain Caucus. In case you missed it, he gave an inspiring speech calling for a light touch to regulation at our DC Blockchain Summit earlier this year.
        • David Schweikert introduced two pieces of legislation. H. Res. 1108, a resolution recognizing blockchain as a technology with “incredible potential that must be nurtured through support for research and development, and a thoughtful and innovation-friendly regulatory approach.” It summarizes the potential promise of blockchain to government, businesses, and consumers and outlines the industries and areas that stand to benefit from it, including education, identity, and cybersecurity. H.R. 7002 seeks to amend the E-SIGN Act to confirm the applicability of blockchain and smart contracts within laws governing electronic records and signatures. It pursues remedying the problem of a developing patchwork of state legislation addressing the use of blockchain and smart contract technology in electronic signatures and records. We have been vocal on this issue for quite some time. (Our most recent white paper, “Smart Contracts: Is the Law Ready?,” discusses our position in greater detail and was also published last week.) Congressman Schweikert has been a steadfast leader in Congress on these issues (watch him talk about the amazing potential of blockchain technology at our DC Blockchain Summit!), and we look forward to further collaboration to support industry-related topics.
          • Over the past year, the Congressional Blockchain Caucus convened a series of the roundtables with industry leaders covering: (1) digital identity; (2) payments; and (3) supply chain. The series resulted in a reportentitled, “Understanding Blockchain’s Promise for Government,” published in consultation with the Caucus outlining the findings made during the roundtables.
            • Ted Budd (R-NC), along with 14 other members of Congress, sent a letter to SEC Chairman Clayton asking for more regulatory clarity for the token industry. The letter requests that the SEC elaborate on the criteria used to determine when offers and sales of digital tokens should properly be considered “investment contracts,” and to confirm that digital tokens originally sold as investment contracts can become non-securities. The letter also requests confirmation regarding statements made in SEC Director of Corporation Finance Bill Hinman’s June 2018 speech “When Howey Met Gary (Plastic)” (and expresses appreciation for statements made by SEC Commissioner Hester Peirce in her speech Motherhood and Humble Pie). Finally, the letter seeks more information about the various tools the SEC has to provide further guidance to innovators.
              • Warren Davidson (R-OH) hosted a forum on the regulation of digital currencies and initial coin offerings (ICOs). During the event, he discussed the legislation that he has been developing, which may include preemption provisions for state licensing requirements for entities such as token trading platforms. During the forum, Paul Atkins, former SEC Commissioner, CEO of Patomak Global Partners, and Co-Chair of the Chamber’s Token Alliance, while discussing the state licensing preemption provisions said, “[w]e have 50 states here, and those states have many different people who have interests in securities markets.”