Top 5 Policy Priorities at the Chamber
As the saying goes “blockchain never sleeps.” It’s the Chamber’s mission to promote the acceptance and use of digital assets and blockchain-based technologies. We do this tirelessly through education, advocacy, and working closely with policymakers, regulatory agencies and industry. Following are the top five priorities that keep the Chamber team up at night:
- Recognition that blockchain will transform the way we record, track, and transfer anything of value. Just as the internet transformed the way we share information with each other, with millions of applications running on it to enable such activity, so will blockchain technology revolutionize the way we account for ownership, provenance, and transfers of value or property. Many other nations have realized this potential – including the United Kingdom, the European Union, Singapore, the United Arab Emirates, and central banks worldwide, to name just a few. These are significant financial centers – the United States is at risk of falling behind when it focuses solely on enforcement actions against wrongdoers without also supporting innovation that will benefit government, industry, and citizens. The U.S. government needs a senior official to recognize the importance of this innovation and create policies to enable it to flourish, including incorporating the technology into government programs such as identity management (e.g., passports and visas), social programs (e.g., social security, welfare, and similar programs), and regulatory oversight (by acting as a “node” on a network) – to name a few.
- Streamline Regulatory Oversight. The virtual currency industry and token trading platforms are subject to a patchwork of state-by-state regulation of money transmitters, that also include federal regulatory oversight through FinCEN and the CFTC, among others. This state-by-state approach currently does not even allow a company to obtain money transmitter licenses in every state – about a dozen states have not licensed any virtual currency business. The NY BitLicense, a law specific to virtual currency business activity, just reached a milestone of only eight licenses granted, three years after the law was in the books. This framework creates significant legal expense and impediments to operations to seek approval in 49 states plus several territories, while still being subject to federal laws. The industry needs one solution to oversee this industry, not dozens.
- Tokens: Tokens offer an incredible expansion of the way we think of assets by digitizing those assets and offering ways to transfer them in a secure and efficient way. Token sales, also referred to as “Initial Coin Offerings” (ICOs), can raise capital for new companies, or other prospective users a means of participating on a platform. In 2018 alone, there have been more than 270 token sales raising more than $5.7 billion. The Chamber supports policies that protect purchasers and facilitate appropriate disclosures, while promoting innovation through token issuances.
- Anti-Money Laundering and Terrorist Finance: Like any industry and any currency, virtual currency and blockchain technology can be used for incredibly important purposes. However, in some cases, they’re used to engage in unlawful activity. The Chamber believes in modernizing U.S. anti-money laundering (AML) laws while allowing the agencies responsible for enforcement the flexibility to address risks as and when they arise. We also co-founded the Blockchain Alliance to facilitate a dialogue with and serve as a collaborative resource among law enforcement and the blockchain industry.
- Smart Contracts: Blockchain-based computer codes can simplify the way we conduct business, pay bills, and ratify contracts, for example. We at the Chamber are working to promote the use of smart contracts in educating legislators that existing U.S. law – the Electronic Signatures in Global and National Commerce Act (“ESIGN Act”) and the Uniform Electronic Transaction Act (“UETA”) — already provide sufficient legal basis for smart contracts executing terms of a legal contract. Efforts by states to amend their state UETA laws will not only introduce another confusing patchwork of laws addressing this technology, but risk legal action through the preemptive force of the ESIGN Act.
- Tax: From paying a simple bill, purchasing a flight or consumer goods, virtual currencies are becoming more commonly used. In 2014, however, the IRS decided it would treat convertible virtual currency as property. That means that every simple transaction (such as buying a cup of coffee) is not only subject to sales tax, but also the calculation of capital gain/loss and investment income tax (with cumbersome reporting requirements included!). This treatment hinders the use of virtual currencies as a method of payment, which in turn, prevents their ability to reach a wide spectrum of potential participants in the financial system. The Chamber supports policies that treat virtual currencies fairly – as an alternative currency rather than as property subject to capital gain or investment income tax.
- Accounting: Businesses that recognize the potential of blockchain technology cannot hold these assets and record it on their books without sorting out the appropriate accounting treatment. Currently, no accounting standards exist to guide a business on the appropriate treatment of these assets – leaving businesses and their accountants to guess at a reasonable method and issue qualified opinions. Such opinions can impact a company’s ability to obtain funding or loans, among others. The Chamber believes that the Federal Accounting Standards Board (FASB) should address the accounting standards for digital currencies.