Tag: policy

The Digital Chamber (TDC) applauds Congressman Timmons for his leadership in introducing the groundbreaking New Frontiers in Technology (NFT) Act, the first bill in U.S. Congress to directly address the legal and regulatory treatment of non-fungible tokens (NFTs). We also greatly appreciate that Congressmen Torres has co-sponsored this legislation making it bipartisan. 

Considering recent securities lawsuits and Wells Notices targeting actors in the NFT space, this critical legislation ensures that certain covered NFTs, and their evolving use cases, are correctly defined in law, and are clarified to not be securities.  

TDC Efforts 

While we anticipate a less hostile SEC in the next administration, it is imperative that Congress act now. Passing NFT and other digital asset legislation is essential to establish permanent laws and provide much-needed clarity for the industry. That’s why TDC has been advocating for appropriate NFT legislation for years. We are proud to see the NFT Act include language developed in the CFTC Global Markets Advisory Committee’s working group on NFTs, led by TDC’s Founder and CEO Perianne Boring. We also synthesized these policy recommendations in our Pixels to Policy Report released in July 2023. 

So what exactly does this bill do to protect NFTs? Below is a breakdown of its key provisions: 

1. Defines Non-Fungible Tokens: 

• The bill defines NFTs as any asset that has limited production or uniqueness so that it can be assessed or identified by its unique digital identifier on a on a public distributed ledger; is the digital equivalent of a tangible or intangible good; has inherent function beyond the fact of being on chain; and can be exclusively possessed and transferred from person to person, without reliance on intermediaries. 

• The definition of NFTs in this bill explicitly excludes a comprehensive list of traditional securities, commodities futures, derivatives, and other investment contracts. The list of exclusions was expanded significantly from the discussion draft. TDC and our members greatly appreciate this clarity. 

2. Defines and Creates Protections for “Covered” Non-Fungible Tokens 

• “Covered non-fungible tokens,” per the text, are not investment contracts, and the sale of a covered NFT is not a transaction in a security. This means covered NFTs—that is, most NFTs—are not securities, and the SEC has no claim to regulate them.  
• Covered NFTs are described as those which are primarily for personal, family, or household consumption, listing specific categories. Those include NFTs created as: 
• Works of art, musical compositions, literary works, or other intellectual property 
• Collectibles, merchandise, virtual land, or video game assets 
• Digital identifiers or other certificates or credentials (a new category in this version of the text that TDC applauds the inclusion of) 
• Affinities, rewards, or loyalty points 
• Rights, licenses, or tickets 
• Exclusions apply, however. Even if they fall into one of the categories above, NFTs are excluded from protective coverage under this bill if they are marketed by an issuer or promoter primarily as an investment opportunity, or with promises of future actions designed explicitly for the purpose of increasing the NFT’s value. 

3. NFT and Digital Asset Study 

• The final provision directs the Comptroller General of the Government Accountability Office—and not, importantly, a financial regulatory body like the SEC—to carry out a study of non-fungible tokens and other digital assets, including payment stablecoins, within one year. The report would cover topics, spanning from token minting and custody, to interoperability, to market risks and opportunities, and beyond. 

Your Support is Crucial    

Help the digital asset industry flourish responsibly without the hindrance of misapplied securities regulation.  Contact your Representatives in Congress and voice your support for this important bill. By supporting this Act, you can ensure continued technological innovation, greater consumer protection, and a true home within the United States for blockchain technology. 

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As the U.S. gears up for President-elect Donald Trump’s incoming, crypto-friendly administration, the Securities and Exchange Commission (SEC) has the opportunity to reset its historically troubled relationship with the global digital asset industry and launch an era of transparency, cooperation, and well-reasoned regulation to bring much-needed clarity to digital asset market participants.  We need to foster a culture of mutual trust – where the digital asset industry can have confidence in the SEC’s intentions, and the SEC can recognize that most digital asset participants are striving to operate responsibly. 

President-elect Trump’s nominee for SEC Chair, Paul Atkins — a seasoned SEC veteran and member of The Digital Chamber’s advisory board — alongside Commissioners Peirce and Uyeda, both outspoken critics of the SEC’s anti-digital asset agenda in recent years, are ideally positioned to assess the agency’s actions across it’s divisions and offices. Together, we’re confident they can identify the problematic practices that have stymied the growth and innovation of digital asset market participants in so many ways.

It is not just time to end the “policy” of regulation by enforcement, but also to clear the decks of outdated and confusing former director and staff level speeches, letters and other informal and non-binding “guidance” that make it nearly impossible for current market participants to understand how to comply with the SEC’s rules and regulations. Finally, it is time for sensible and clear Commission statements, no-action letters, and bespoke rulemaking for the digital asset industry. 

What’s Happening

TDC’s Token Alliance Leadership Committee is taking a proactive role in framing out an agenda for the SEC’s new Chair and Commission majority by offering a list of policy priorities designed to start the process of rebuilding trust with the global digital asset community. This week, members of the Token Alliance Leadership Committee met with the staff of SEC Commissioners Hester Peirce and Mark Uyeda to present our 2025 SEC Digital Asset Policy Priorities, which include:

• A timeline for action beginning on Day 1 to Day 90 of the new administration;
• A detailed list of critical and important policy priorities set out by division that should be addressed along that timeline.

We were very pleased by the openness of the dialogue during this meeting and a willingness for ongoing input and look forward to continuing to inform and engage with the SEC on these priorities.

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The Digital Chamber proudly congratulates Congressman French Hill on his appointment as Chairman of the House Financial Services Committee for the 119th Congress. 

Chairman-elect Hill’s leadership and vision have been pivotal in shaping the future of digital assets and financial services. As the author of the Financial Innovation and Technology for the 21st Century Act (FIT21)—a historic, bipartisan achievement—he has demonstrated mastery of complex financial policy and the ability to forge consensus on critical issues. Further, Chairman-elect Hill has been a relentless advocate for fair banking access, fighting to end discriminatory practices that exclude lawful digital asset businesses from essential financial services. As the current chairman of the House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion, as the former Republican lead on the Committee’s FinTech Task Force, and as an engaged member of the Congressional Blockchain Caucus, Chairman-elect Hill’s leadership and track record on digital assets policy is nothing short of exemplary. 

We look forward to continuing our collaboration with Chairman-elect Hill as he leads the Committee toward policies that secure America’s leadership in blockchain and digital assets. His commitment, expertise, and proven results are exactly what this transformative era in financial services demands. 

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We are delighted to congratulate our esteemed Board Advisor, Paul Atkins, on his nomination as Chairman of the U.S. Securities and Exchange Commission.

Mr. Atkins has been a pivotal ally in advancing our mission to develop robust, orderly, and fair digital asset markets. His dedication, insight, and leadership have been instrumental in shaping our efforts and vision for the future of the industry.

Mr. Atkins is the ideal choice to support President-elect Trump’s bold vision of establishing the United States as the global leader in digital asset innovation. We are confident his expertise and commitment will help pave the way for a thriving and forward-looking regulatory environment.

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The Digital Chamber (TDC) wrote to Senate Banking Chairman Sherrod Brown (D-OH) and Ranking Member Tim Scott (R-SC), urging them to oppose Commissioner Crenshaw’s reappointment to the SEC. Read the full letter to the committee here.

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The Problem: 

U.S. critical infrastructure—like transportation, communication, health, water, and energy—is the backbone of the country’s economy. Yet, it remains increasingly vulnerable to cybersecurity disruptions from adversaries. 

Furthermore, FBI Director Christopher Wray warned earlier this year that “China’s hackers are targeting American civilian critical infrastructure, pre-positioning to cause real-world harm to American citizens and communities in the event of conflict.”¹ China is only one of several nation-states undermining U.S. cyber defenses, but Chinese advanced persistent threats (APTs) consistently rank among the most capable and intrusive. In December 2023, U.S. investigators discovered that hackers known as Volt Typhoon, affiliated with the Chinese People’s Liberation Army, had launched cyberattacks against government offices and infrastructure. These attacks aimed to gather intelligence, monitor citizens, and prepare to disable or degrade systems’ performance in future operations targeting the U.S. and its partners. Evidence suggests these APTs may have been active within U.S. networks since 2019. 

Most recently, hackers breached the networks of the largest water utility company in the U.S. that provides drinking and wastewater services to more than 14 million people in 14 states and 18 military installations.² One can only imagine how our adversaries could exacerbate national emergencies and disasters by degrading these critical systems in times of greatest need and vulnerability. 

The Solution: 

Blockchain technology can help mitigate some of these risks; they are inherently secure, and offer several key advantages that can bolster American cybersecurity capabilities: 

• Decentralization – Unlike traditionally centralized databases, blockchains operate on a distributed network of nodes. This decentralized architecture eliminates single points of failure, making it significantly more challenging for attackers to disrupt or compromise the entire network. 
• Immutable Ledgers – Blockchain employs cryptographic hash functions to secure transactions. Each block in the chain contains a hash of the previous block, creating a cryptographic linkage that ensures immutability. This property ensures a permanent, auditable record that is highly resistant to tampering. This is especially important in cybersecurity, where edges and nodes in a network can hold and communicate threat profiles and defensive resources more efficiently than regular, distributed updates pushed out by centralized entities.
• Enhanced Transparency and Trust – A blockchain is a distributed, shared ledger where all participants can observe and verify transactions, fostering trust and facilitating identification and mitigation of anomalies or fraudulent activity. 
   

What is to be done? 

U.S. allies and adversaries have either developed or are currently developing robust and progressive national blockchain strategies to leverage the high security, high fidelity, and low latency the technology offers. The U.S. government has consistently acknowledged the importance of blockchain technology and the need for policy development to support its secure deployment. For instance, the National Institute of Standards and Technology (NIST) Cybersecurity Framework highlights the importance of incorporating blockchain into cybersecurity strategies.³ Additionally, Executive Order 14028, Improving the Nation’s Cybersecurity, underscores the need for enhanced cybersecurity measures and encourages the exploration of blockchain technologies to strengthen the nation’s cybersecurity posture. 

However, many U.S. policymakers have ignored the seriousness of the threat posed in cyberspace and the possibilities of blockchain to mitigate those threats.  

The Digital Chamber (TDC) recommends that the U.S. government engage the blockchain industry and support its holistic development via an increase in strategic investment and research through agencies like the National Science Foundation, In-Q-Tel, Defense Advanced Research Projects Agency (DARPA), NIST, the Department of Homeland Security, the Department of Defense, and others. 

It is vital for U.S. national security interests to lead in advanced computing and blockchain innovation, to ensure networks are safe, information remains secure, and the U.S. can respond effectively to emerging threats. 

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The Digital Chamber is excited to announce its strategic partnership with Stablecoin Standard, an organization renowned for its international leadership in promoting transparency, stability, and innovation in the stablecoin ecosystem.  This partnership promotes joint efforts to shape a robust regulatory framework for stablecoins and enhance their adoption across global financial systems. 

The partnership between The Digital Chamber and Stablecoin Standard will focus on several key areas: 

• Amplifying the Stablecoin Standard’s best practices and frameworks for stablecoin issuance and management. 
• Engaging with policymakers in the U.S. and abroad to create a balanced regulatory environment. 
• Educating global stakeholders on the benefits and risks associated with stablecoin use. 

Cody Carbone, President of The Digital Chamber, expressed his enthusiasm about the collaboration: 

“Stablecoins are inherently global, and to drive worldwide adoption of payment stablecoins, we need partners with a deep understanding of international markets. Stablecoin Standard’s proven excellence in navigating complex regulatory landscapes abroad is an invaluable asset. Together, we can ensure that USD-backed stablecoins thrive not just in the U.S. but across global financial systems, bringing stability and efficiency to cross-border transactions.” 

Stablecoin Standard’s leadership also highlighted the importance of this partnership in driving forward-thinking solutions for the stablecoin industry. 

“Stablecoin Standard is thrilled to announce this partnership as we advance our mission to promote responsible innovation. Our collaboration with the Digital Chamber, including active participation in the Stablecoin Working Group, marks a strategic step toward building a resilient and transparent global stablecoin market.” – Beth Haddock, Global Policy Lead for Stablecoin Standard. 

This collaboration underscores The Digital Chamber’s commitment to advancing blockchain technology and digital asset innovation, providing a platform for dialogue between the private sector and regulators.   

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What are Deepfakes?  

Deepfakes are AI-generated synthetic videos and audio that convincingly mimic human speech and movement, often impersonating real people in scenarios that never occurred. These AI-powered tools are the latest and most dangerous threat in the ongoing battle against disinformation. 

How Are They Being Used?  

• Disinformation and Electoral Influence: Deepfake technology surged as a disinformation tool in 2024, with at least 133 documented campaigns impacting more than 30% of the 60 countries that held elections in 2024. Thirty-seven percent (37%) of these disinformation campaigns focused on U.S. elections, with actors linked to China, Iran, Russia, and North Korea weaponizing deepfakes to polarize and misinform voters.¹ 

• Cybercrime and Corporate Fraud: Criminals are increasingly using deepfake technology to impersonate senior executives and infiltrate corporate systems. A common threat involves fraudsters mimicking an executive’s voice to authorize a fraudulent wire transfer or access sensitive data, exemplifying the risks of corporate theft, IP compromise, and economic harm.² 

• Weaponized Harassment and Exploitation: Deepfake pornography made up 98% of all deepfake videos online in 2023, often targeting women, activists, or dissidents.³ Victims of these crimes face devastating personal and professional consequences, with such harassment increasingly used to silence critics of authoritarian regimes.⁴ 

Blockchain Solutions and the Immutable Watermark 

Blockchain technology offers a compelling solution to combat the challenges posed by deepfakes by leveraging its unique attributes of immutability, transparency, and decentralized recordkeeping. By securely storing and publicizing image provenance metadata – data about where and how an image was captured or created – analysts can verify the origin and history of media, ensuring it remains unaltered. This makes it nearly impossible for bad actors to tamper with or falsify content undetected.  

Blockchains enable verification nodes to maintain the fidelity of media content, using economic incentives to ensure honest participation. For example, in proof-of-stake blockchains like Ethereum, validators risk losing a portion of their staked cryptocurrency through slashing mechanisms if they submit false data or act maliciously, thereby upholding the integrity of the system. 

Furthermore, Zero-knowledge proofs (ZKPs) strengthen blockchain’s ability to verify media by confirming authenticity without revealing sensitive information. ZKPs work by comparing small pieces of encrypted evidence between users and verifiers, preserving privacy while ensuring accuracy. Once the small pieces of encrypted evidence are compared, the system verifies whether the media matches its original, unaltered state. 

In contrast, legacy solutions like metadata watermarking and the Coalition for Content Provenance and Authenticity’s (C2PA) standard to identify AI-manipulated media face limitations.  These methods do not incorporate the immutability, auditability, or economic incentive mechanisms of blockchains.  Specifically, C2PA watermarks are often lost when files are reformatted – such as when they are converted from JPEG to PNG. Additionally, legacy detection methods rely on AI models to be pre-programmed to an unknowable standard. C2PA audit trails are hosted by centralized entities like Adobe, Microsoft, and Google – all of whom have suffered recent data breaches. Blockchain-based deepfake detection stands out as the most effective approach to mitigate the risks of deepfakes, addressing critical issues like AI-enabled harassment, corporate theft, and political disinformation. 

Who we are: 

The Digital Chamber (TDC) advocates for national and international standards that leverage blockchain’s inherent strengths that can mitigate AI’s greatest risks.  

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 The Digital Chamber (TDC) has issued a detailed response to the letter sent by Representatives Casten, Lynch, Foster, Sherman, Scott, Cleaver, and Beatty to Secretary Yellen and Acting Under Secretary Smith regarding the potential risks posed by cryptocurrency mixers. 

In our response, we emphasize the need to contextualize the role of mixers within the broader financial ecosystem. While we acknowledge the challenges posed by bad actors, we also highlight the legitimate privacy benefits these technologies offer to activists, refugees, and others seeking financial security in oppressive environments. 

Our response underscores how privacy-preserving tools like mixers can coexist with robust compliance measures, such as those outlined in FinCEN’s guidance, to balance security and innovation. By leveraging existing regulatory frameworks, advancing education, and fostering partnerships between industry and law enforcement, we can ensure privacy-preserving technologies are used responsibly. 

We remain committed to supporting policies that enhance security without stifling innovation. Together, policymakers and industry leaders can create a balanced framework that prevents illicit activity while fostering a secure and inclusive digital asset ecosystem. 

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What is it  

Budget reconciliation is a legislative process established by the Congressional Budget Act of 1974, allowing Congress to adjust federal spending, revenue, and debt limits in a streamlined manner. Budget reconciliation allows legislation impacting debt, spending, or revenue to pass the Senate with a simple majority, bypassing the 60-vote filibuster threshold.   

This tool is typically used when one party controls the presidency and Congress but lacks a filibuster-proof majority.  The Congressional Budget Act of 1974 permits reconciliation to be used up to three times a year.   

Process  

The process begins when the House and Senate agree on a budget resolution, which is usually drafted by the Budget Committees in each chamber. This budget resolution includes “reconciliation directives” for specific (authorizing) committees, instructing them to craft legislation that achieves targeted fiscal outcomes, such as reducing or increasing spending or revenue by a set amount within a designated timeframe. Each designated committee then creates legislation to meet these fiscal targets and has flexibility on how to achieve these goals.    

Example: House and Senate Republicans pass a budget resolution that sets a fiscal goal of cutting $100 million over the next decade. The ‘reconciliation directives’ direct the Senate Finance Committee to craft legislation that cuts $50 million and the Senate Energy Committee to cut $50 million.   

Once the committees meet the directives, each committee’s bill package—usually comprised of multiple, separate high-priority bills—is then further combined into a single omnibus ‘reconciliation’ bill.   

The budget reconciliation process starts in the House, who send their reconciliation bill to the Senate. In the Senate, this bill is fast-tracked, with debate limited to 20 hours and a filibuster prohibited – although there may be amendments. The House Rules Committee, with its own mechanisms for limiting debate, usually adopts special rules for budget reconciliation, specifying debate time and permissible amendments.   

  

History  

Historically, budget reconciliation has been used sparingly, with just 22 instances since its inception in 1974. Since 2000, it has been used during periods of one-party control and taken the form of  tax cut measures under Presidents Bush and Trump, the Affordable Care Act under President Obama, and most recently to pass, the American Rescue Plan in 2021 under President Biden to expedite COVID-19 relief.  

In the 119th Congress, Republicans are likely to use budget reconciliation to advance tax cuts. With several of the 2017 Tax Cuts and Jobs Act (TCJA) personal tax provisions and exemptions expiring in 2025, all eyes will be on Congress to present a new tax package to President-elect Trump for his deliverance on campaign promises.   

With tax legislation, top of mind for most congress members entering 2025, expect crypto to be front and center in these conversations. Digital Asset stakeholders and advocates may capitalize on this opportunity to ensure much-needed clarity and reforms are made to current digital asset tax law. The Digital Chamber will continue advocating for the simplification of reporting requirements for digital assets transactions without infringing on privacy, while also promoting different tax reform legislation.  

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