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The Chamber of Digital Commerce, representing the world’s leading innovation in digital assets and blockchain technology, has been closely monitoring the Securities and Exchange Commission’s (SEC) recent enforcement action against Kraken. This development is particularly concerning as it represents another instance of the SEC’s aggressive regulatory approach towards the digital asset industry. 

We have consistently emphasized the importance of a balanced and clear regulatory framework that not only protects consumers but also fosters an environment conducive to innovation. The ongoing situation with Kraken further underscores the urgency for Congress to provide legislative clarity that thwarts the overreach and unjust tactics of the SEC.  

“The time is now for Congress to step up and do their job of actually legislating, so entrepreneurs can innovate and continue to make America a premier destination for emerging technologies,” said Cody Carbone, Vice President of Policy. “The pattern of SEC overreach in the digital asset world is unacceptable.” 

We will be monitoring this action closely. The Chamber of Digital Commerce remains committed to advocating for a regulatory landscape that is fair, transparent, and conducive to innovation.  

We express our profound disappointment regarding Governor Kathy Hochul’s decision to veto the bipartisan bill S1891, which proposed the creation of a cryptocurrency and blockchain study task force. This veto represents a missed opportunity.

The formation of this task force was a pivotal step towards understanding and navigating the complex and rapidly evolving landscape of cryptocurrencies and blockchain technology. Its purpose was to ensure that New York remains at the forefront of innovation while protecting consumers and maintaining market integrity. The veto of this bill impedes New York’s ability to adapt to and shape the future of finance and technology.

We hope Governor Hochul will reconsider this decision, recognizing the critical need for informed and balanced regulation in the digital assets sector. The Digital Chamber’s commitment to advocating for smart, balanced regulation of digital assets remains unwavering. We will continue our efforts at every level – state, federal, and international – to champion regulations that foster innovation, ensure market stability, and protect the interests of all stakeholders in this dynamic industry.

 
Last week, the Digital Power Network hosted  45 C-Suite digital energy executives  in Washington, D.C. Our mission was to convey a vital message to policymakers:  

Digital Asset Mining is Advancing America’s Energy Security

We met with nearly 40 Members of Congress from both sides of the aisle, sharing tangible, real-world examples that underscore how the Bitcoin mining industry is playing a pivotal role in advancing America’s energy security in four significant ways: grid stability, national security, decarbonization and sustainability.     
 
In making sure that America’s energy is secure, the Digital Power Network is proud to support  House Resolution 238. This resolution signifies the sense of the House of Representatives regarding the importance of Proof-of-Work mining to the United States’ ability to achieve its energy goals and grow its economy. It marks a pivotal moment in how the Federal Government approaches Proof of Work mining—a recognition that it plays a key role in advancing energy security.  

We also hosted a private roundtable on Wednesday, October 25th, where 45 C-Suite executives from the Bitcoin mining and energy sectors gathered to discuss their collaborative efforts in fostering America’s energy security. Together, we identified how Bitcoin mining aligns with energy and national security priorities, while also driving decarbonization and sustainability.  

The Chamber takes great pride in the fact that the Digital Power Network had the opportunity to showcase our pioneering work in the digital energy space to Congress and leading energy companies. 
 
To all those who attended, the Chamber extends its heartfelt thanks for contributing to an unforgettable event where we made significant strides in advancing the digital asset mining agenda in Congress.  

In response to the misinformation in Senators Warren and Marshall and Representative Casten’s letter to the Biden Administration on crypto-financed terrorism, the Chamber wrote a letter to 280 Congressional staffers, including to all of the 102 co-signees and other relevant Members’ staffers.

The letter provides the full known context of crypto in financing terror and dispels the inaccurate conclusions derived from faulty analysis and methodology. The Chamber supports the proactive use of blockchain technology and related analytics to track, deter and apprehend terrorists and criminals. Mischaracterizing the use of blockchain and crypto in perpetrating heinous crimes does a disservice to the myriad American blockchain-based businesses striving to protect national security and grow our economy.

Today, the Chamber of Digital Commerce submitted a formal response to the New York Department of Financial Services’ (NYDFS) Proposed Coin-Listing Policy Framework. A sincere thank you to all members who joined our workstream and contributed to this response.  

The response provided NYDFS with insights into the potential pitfalls of the proposed framework, while advocating for a more balanced regulatory environment. We challenge NYDFS’s proposed shift of compliance burdens onto Virtual Currency Entities, arguing doing so could further stifle digital asset innovation in New York. The Chamber also expresses reservations about the Department’s unilateral decision-making processes, such as the delisting of tokens, which we believe undermines trust and due process. 

Oct. 18, 2023 – The Chamber of Digital Commerce, the world’s leading digital asset and blockchain trade association, has submitted an Amicus Brief in the ongoing case between the Securities and Exchange Commission (SEC) and Binance.US. Our brief aims to assist the Court in critically evaluating the legal merits of the SEC’s allegations while advocating for a more transparent regulatory approach challenging the SEC’s aggressive tactics which lack clear legislative authority.

“This Amicus Brief is part of our continued legal efforts advocating for a balanced and clear regulatory framework that both protects consumers and fosters innovation,” said Perianne Boring, Founder and CEO of The Chamber of Digital Commerce. “We are optimistic that the Court will consider the arguments laid out in our brief and we will continue to fight against the SEC’s overreaching and unjust tactics.”

The Chamber’s brief argues that the SEC’s confrontational approach towards digital asset entities like Binance.US is stifling innovation in the U.S. and that the Commission has stretched the bounds of U.S. security laws to fit the anti-digital asset agenda of the Chair. With such a prominent level of Congressional interest in digital asset regulation, The Chamber also contends the SEC’s current actions imply an overreach of its authority, raising constitutional questions about separation of powers and due process.

“The SEC’s case against Binance.US is the latest in a recent line of SEC actions that misapply settled securities-law precedents in an effort to reach digital assets that do not qualify as securities subject to SEC jurisdiction under any existing law or regulation,” said Steven Gatti, Partner, Clifford Chance LLP. “While the Chamber of Digital Commerce supports sensible regulation of digital assets, any legal or regulatory framework should be thoughtfully crafted by Congress and implemented by financial regulators via regular notice-and-comment rulemaking. The SEC’s regulation-by-enforcement approach deprives market participants of regulatory certainty, which hampers innovation and drives digital-assets businesses offshore, harming US consumers and workers.”

The Chamber argues the SEC should employ more traditional administrative tools, including public rulemaking processes, allowing for the establishment of clear and reasonable regulatory guidelines. The Chamber emphasizes that such an approach would be more transparent and collaborative, fostering an environment where both regulatory bodies and market participants can operate with greater certainty.

In an age of fast-paced information dissemination, ensuring the accuracy and integrity of news is paramount. Today, we find ourselves compelled to address a critical matter of misinformation that has recently come to light. The Chamber of Digital Commerce has taken a significant step by submitting a correction request to The Wall Street Journal concerning their most recent article regarding Hamas’ alleged use of cryptocurrency.

The article in question appears to suggest that this notorious terrorist organization is exclusively funded by cryptocurrency—a claim that, upon closer examination, proves to be both misleading and far from the truth. The reality is that cryptocurrency, far from being the preferred currency for criminals, serves as a valuable tool for law enforcement agencies seeking to track and monitor illicit activities.

However, this incident is not isolated, for the cryptocurrency realm has long been the unfortunate victim of inaccurate media portrayals that construct a narrative starkly distant from reality. It is imperative for the media to uphold the principles of journalistic integrity by providing a fair, balanced, and comprehensive account of this crucial issue.

In our ongoing commitment to transparency and accuracy, we invite you to peruse our submitted correction for the record below.

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Dear Editors,  

I am writing to address The Chamber of Digital Commerce’s concerns regarding the recent article titled, “Hamas Militants Behind Israel Attack Raised Millions in Crypto.” We believe that certain aspects of the article require clarification and correction to provide a more accurate portrayal of the role of cryptocurrency in the Israeli conflict. 

First and foremost, we believe that the article’s implication that groups like Hamas, Palestinian Islamic Jihad (PIJ), and Hezbollah are primarily and effectively funded through cryptocurrency sources is not supported by the available evidence. We respectfully request that The Wall Street Journal publish a correction to offer critical context for the benefit of the public, honest industry participants, and national security. 

The article begins by saying “Hamas’s lighting strike…raised the question how the group financed the surprise operation. One answer: cryptocurrency,” and suggests that over the last year, these three terror groups “received large amounts of funds through crypto.” This framing is, at best, imprecise and, at worst, misleading. These groups finance their operations through various means, including illicit finance via traditional banking systems, hawala networks, and state sponsorship. For instance, Hezbollah receives substantial funding from Iran, far surpassing the amounts received through cryptocurrency. 

Furthermore, while the article includes a graph of “crypto funds received by Palestinian Islamic Jihad”, it fails to point out that in April 2024, Hamas announced it was ceasing to accept funds in cryptocurrency to protect its donors. Shortly after this announcement, funding to Hamas in crypto decreased dramatically. The article should include the critical point that Hamas suspended crypto funding earlier this year.  

It is also worth noting that attempts from other organizations that are seeking to raise funds to support Hamas through cryptocurrency have failed to raise any material amount of funds.  

The article does not adequately highlight how blockchain technology, as an open and transparent ledger of transactions, facilitates the tracking, tracing, and dismantling of cryptocurrency-based terrorist funding avenues. Providing this context is crucial to understanding the effectiveness of blockchain for law enforcement. 

Finally, the authors should provide the full scope of the issue. It is estimated that only .24% of crypto activity in 2022 was illicit. Compare that to the UN Office on Drugs and Crime estimates that 2-5% of global GDP is used on money laundering alone—that is $800B versus $2T.  Regardless of the arguable precision of either of these figures, cryptocurrency is not the currency of choice for illicit activity, like the article suggests.  

In conclusion, while we acknowledge that new technologies can be exploited by bad actors, it is essential to recognize that, in the case of cryptocurrencies, these attempts often serve as more valuable tools for law enforcement than for criminals. Public and transparent ledgers make concealing illicit funds through cryptocurrencies inefficient and risky. 

We believe that a balanced and comprehensive argument is crucial, as it not only upholds journalistic integrity but also serves the best interests of your readers and the dedicated businesses striving to enhance economic conditions and protect national security. 

Thank you for your attention to this matter. We look forward to your response and hope to see these corrections made in the near future. 

Thank you,  

Perianne Boring 
Founder and CEO 
The Chamber of Digital Commerce 

The Chamber of Digital Commerce, representing the forefront of the digital asset and blockchain industry, wholeheartedly extends our support for the bipartisan initiative demonstrated by the Financial Technology Protection Act. This key legislation, championed by Senators Ted Budd (R-NC) and Kirsten Gillibrand (D-NY), and Representatives Zach Nunn (R-IA) and Jim Himes (D-CT), marks a crucial step towards crafting a secure and favorable environment for the evolution and integration of digital assets and blockchain technology. The bill has enjoyed robust bipartisan support over time, sailing through the House unanimously on two separate occasions in 2018 and 2019.

We applaud the introduction of an Independent Financial Technology Working Group, as stipulated by the act. This aligns well with our long-standing advocacy for a collaborative discourse between government entities and industry leaders. Such an initiative is pivotal in identifying and addressing regulatory voids, thereby positioning the United States at the helm of digital asset innovation on the global stage.

Find our one-pager on the bill here.

The Chamber of Digital Commerce is writing to encourage Congress to support Section 10 of the SAFER Banking Act. This provision is a critical step in addressing the de-banking issue faced by the blockchain industry. Federal banking agencies must prioritize the safe and sound operation of banks and credit unions while refraining from using personal beliefs or political motives to restrict access to financial services. By providing clear guidelines, transparency, and accountability, it ensures that legitimate blockchain businesses have the necessary access to financial services to thrive, innovate, and contribute to the broader economy. This section strikes a balance between regulatory oversight and the need for financial inclusion, supporting the growth of a sector with immense potential to transform industries and improve financial services for all. As a representative of the blockchain industry, we wholeheartedly endorse it.  

Every business requires steadfast banking partners to flourish. Section 10 of the SAFER Banking Act champions this by ensuring access to financial services, while upholding risk-based customer diligence and suspicious activity monitoring. It distinctly outlines the criteria for deposit account termination, stressing that mere reputation risk is insufficient for such actions. This is especially vital for blockchain enterprises, which often confront undue prejudice due to their innovative nature. 

Moreover, the Act mandates Federal banking regulators to provide a clear legal rationale in writing when proposing the termination of a deposit account, ensuring transparency and upholding due process. This, coupled with reviews by Inspectors General, instills an essential layer of accountability, preventing unwarranted actions against blockchain entities. 

In essence, Section 10 of the SAFER Banking Act adeptly addresses the de-banking concerns of the blockchain sector. By offering clarity, transparency, and accountability, it paves the way for legitimate blockchain businesses to access vital financial services, fostering innovation and economic contribution. This provision harmoniously balances regulatory supervision with financial inclusivity, propelling a sector poised to revolutionize industries and enhance financial services universally.  

We urge Congress to recognize the significance of this Act and join us in supporting Section 10. 

Oct. 2, 2023 – While we recognize and appreciate the intent behind the ‘Off-Chain Digital Commodity Transaction Reporting Act’, to enhance transparency and protect consumers, we believe that certain provisions in the bill may inadvertently hinder the growth and innovation of the digital asset industry, while threatening consumer protections. 

A central issue is the bill’s mandate for individuals to report all on-chain swaps to designated repositories in real time. Specifically, for digital commodity sales not executed on a platform, the bill would mandate individual purchasers to report the transaction to a digital asset repository immediately after execution. This presents feasibility challenges due to the decentralized nature of these assets, potentially creating bottlenecks that risk consumer protection.

Moreover, the mandated exhaustive reporting coupled with the extensive access granted to various entities exponentially magnifies privacy concerns. The bill allows a broad spectrum of entities to access sensitive user data, ranging from domestic regulators to foreign authorities. This extensive access, without stringent safeguards, leaves the door open for potential unauthorized disclosures, data breaches, and misuse of sensitive transactional information. The risks associated with such extensive data access could erode consumer trust, compromise individual privacy rights, and potentially expose users to various forms of cyber threats and fraud.

Off-chain transactions, such as those facilitated by Bitcoin’s Lightning Network, offer the benefits of faster transaction speeds, reduced fees, and enhanced scalability. These transactions are especially beneficial for frequent, small transactions between the same parties. The proposed reporting requirements in the bill could undermine these benefits by imposing significant administrative burdens on trading platforms and potentially slowing down the transaction process.

In our ongoing dialogue with Congress members, our emphasis will be on advocating for workable, practical regulations that resonate with the unique attributes of digital assets. The Chamber will continue to advocate for a nuanced and balanced approach that aligns with the unique technical dynamics of the industry, stringently safeguards user privacy, and robustly ensures consumer protection.