Hot Takes

A resolution calling for a pro-bitcoin national policy was just introduced in Congress.

The bi-partisan H.R. 835 was introduced by Rep. Adam Kinzinger and co-sponsored by Rep. Tony Cardenas. Its preamble cites bitcoin and blockchain innovation:

Whereas emerging payment options, including alternative non-fiat currencies, are leveraging technology to improve security through increased transparency and verifiable trust mechanisms to supplant decades old payment technology deployed by traditional financial institutions; and

Whereas blockchain technology with the appropriate protections has the potential to fundamentally change the manner in which trust and security are established in online transactions through various potential applications in sectors including financial services, payments, health care, energy, property management, and intellectual property management

It then calls for “a national policy to encourage the development” to encourage these technologies and their use.

It’s important to note that a House Resolution, if passed, only sets forth the sense of the House of Representatives (and not necessarily the Senate) about what kind of policy the federal government should adopt, either through future legislation or through agency rule-making. It’s not binding and it’s not specific, but it is a good way for the House to communicate in what direction it would like to see government policy move.

The proposed House Resolution from Rep. Kinzinger shows that many in Congress understand that the federal government should adopt policies that encourage blockchain innovations to flourish. That means a national fintech charter from the Office of the Controller of the Currency, as well as smart treatment of cryptocurrencies by the SEC, CFTC, FinCEN, and others.

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New York is creating a cryptocurrency task force. We encourage them to reevaluate the BitLicense as part of their work.

As any cryptocurrency entrepreneur will tell you, getting a BitLicense is difficult and costly. Not only that, but as written the regulation has grey areas relating to custody, requires state approval before a company can add new products or services, and very few licenses have been issued.

The result of this is that many cryptocurrency businesses are choosing to simply forgo doing business with customers in New York.

We are glad to see the New York legislature taking the step of creating a task force to better evaluate the cryptocurrency landscape and its own regulatory stance toward the technology, which is well overdue. As Assemblyman Clyde Vanel noted, “It has been nearly four years since the implementation of the BitLicense. In the cryptocurrency space and technology in general, a few months is equivalent to years.”

We look forward engaging with the task force on this important mission.

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A bill that would clarify securities law for tokens and improve the tax treatment of cryptocurrencies was just introduced in Congress.

Today, Reps. Warren Davidson and Darren Soto introduced the Token Taxonomy Act, which includes several common-sense changes to federal law.

First, the bill would amend the definition of “security” in the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude decentralized cryptocurrencies such as Bitcoin, thereby making clear that such cryptocurrencies are not subject to the rules and regulations of the U.S. Securities and Exchange Commission. We have longargued that classifying decentralized cryptocurrencies as securities would be both impractical and harmful to innovation, a view that the SEC has, to its great credit, also recently taken. Although the SEC has put forth sensible guidance on this question, codifying that decentralized cryptocurrencies are not securities would mitigate any lingering uncertainty.

The bill would also make several changes to the tax treatment of cryptocurrencies. One such change that we have long argued for is a de minimis exemption for cryptocurrency transactions for goods and services. Today, if you buy a cup of coffee with bitcoins and the price of bitcoin has increased since you acquired it, you would have to calculate, report, and pay taxes on any capital gains that you realized as a result of the transaction, no matter how small they might be. The Token Taxonomy Act would create an exemption from this requirement for any gains under $600, similar to the de minimis exemption that foreign currency transactions enjoy today, which we think is a simple and fair way to avoid unfairly discouraging the use of cryptocurrency as a means of payment.

We are happy to see continued action from Congress to implement common-sense clarifications and adjustments to the regulatory treatment of cryptocurrencies. We are looking forward to continued engagement with policymakers on these issues to ensure that the fruits of cryptocurrency innovation are not lost to ill-considered policy.

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The next Coin Center Annual Dinner will be on May 13, 2019

Save the date! Blockchain’s night out is back. We will be returning the the magnificent ballroom of the Plaza Hotel in New York City after the first night of Consensus 2019.

Join us for a evening of food and drink with the best of the cryptocurrency industry, all while supporting Coin Center’s critical policy advocacy mission.

Monday, May 13, 2018 - 7:00 PM

The Plaza Hotel

768 5th Avenue, New York, NY 10019

Individual tickets will be available in early 2019.

You can see pictures from past dinners here.

For table sponsorship opportunities contact antonie@coincenter.org.

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Two new digital asset associations launch to advance cryptocurrency professionalization.

Over the last week, The Association for Digital Asset Markets and Mexican Blockchain Association both launched. Their goals are to develop industry standards, codes of conduct, and best practices among companies working with public blockchain networks.

You can read ADAM’s founding principles here and about the Mexican Blockchain Association (in Spanish) here.

It is great to see cryptocurrency industry participants increasingly work together to improve their standards and build an orderly cryptocurrency ecosystem. We are looking forward to working with both organizations.

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The SEC published much-needed guidance on tokens and trading.

It recently released a “Statement on Digital Asset Securities Issuance and Trading” that uses the example of recent enforcement actions and settlements to illustrate how the securities laws will be applied to token issuance and exchange. It’s well done, reasonable, and says much of what one would expect: That looking at the totality of an activity, doing something that would otherwise be regulated isn’t exempt just because one uses blockchain technology to do it.

That said, we’re a little concerned that the Statement suggests that “an entity that provides an algorithm, run on a computer program or on a smart contract using blockchain technology, as a means to bring together or execute orders could be providing a [regulated] trading facility.” As we’ve explained previously, writing and publishing code alone cannot be a crime.

We do not think the SEC intends to directly regulate the mere creation and publication of code. For one thing, this statement is focused on the current landscape of decentralized exchanges and, as of today, there is no code that, when published to a blockchain on its own, could result in a fully functional exchange. Additionally, the statement repeatedly focuses on “the totality of activities and technology used” to generate the exchange platform, not on any particular activity, such as software design. However, we encourage the SEC to make it clear that merely writing and publishing code for decentralized exchange by itself does not “provide a trading facility.”

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The Blockchain Alliance reaches 100 law enforcement, regulator, and cryptocurrency industry members.

The alliance, launched in 2015, is a forum for the law enforcement, regulators and cryptocurrency businesses to communicate with each other.

When we helped found the Blockchain Alliance, we wrote:

Law enforcement will pursue criminals no matter what technology they’re using, and how law enforcement does this can affect an open technology. As a result, it’s in everyone’s interest–law enforcement, industry, and those of us who want to keep the technology free and open–to make sure that law enforcement understands how the technology works, what can and can’t be done with it, and what are the opportunities and limits it presents for their investigations. To that end, today we announced the formation of the Blockchain Alliance, a forum for law enforcement and regulators to ask questions of each other and to share information, and for law enforcement and regulators to get technical assistance from industry on understanding the blockchain.

We’re excited to see the Blockchain Alliance grow so fast and are hopeful that collaboration between cryptocurrency innovators and government continues to flourish. Read the full announcement here.

(Image credit: /u/Chinxcore)

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We briefed Congress on tracking illicit cryptocurrency use and moderated a convening on ICO regulatory uncertainty.

This was a big week for cryptocurrency in DC.

On Tuesday, members of Congress and over 50 representatives from the crypto industry convened at the Library of Congress for a roundtable entitled “Legislating Certainty for Cryptocurrencies.” The event was organized by Rep. Warren Davidson and also attended by Reps. Tom Emmer, Ted Budd, and Darren Soto. Coin Center executive director Jerry Brito moderated the event, and entrepreneurs voiced their concerns about the lack of clarity around when exactly a cryptocurrency token is or is not a security.

Following the roundtable, 14 members of Congress, led by Rep. Budd, sent a letter to SEC Chairman Jay Clayton echoing the concerns of cryptocurrency innovators and asking for more clarity around the regulatory treatment of these networks.

In another event in Congress on Wednesday, in conjunction with the the Congressional Blockchain Caucus, Coin Center put on a briefing about the tools law enforcement has to track illicit use of cryptocurrencies. Blockchain forensics company Elliptic presented how their product works with real-world examples of illicit funds being traced by law enforcement. Reps. Emmer and Schweikert also gave remarks highlighting the importance of getting the regulatory approach to these technologies right and preserving a fertile climate for innovators in America.


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Based in Washington, D.C., Coin Center is the leading non-profit research and advocacy center focused on the public policy issues facing cryptocurrency and decentralized computing technologies like Bitcoin and Ethereum. Our mission is to build a better understanding of these technologies and to promote a regulatory climate that preserves the freedom to innovate using permissionless blockchain technologies.