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U.S. Senators struggle with cryptocurrencies

A range of crypto-focused bills have been introduced by Members in the House of Representatives and US Senators, with varying definitions and goals.

The latest bill concerning a digital currency was introduced in mid-April. The "Automatic BOOST To Communities Act" was introduced by Representative Rashida Tlaib, Representative for Michigan"s 13th congressional district.

In response to the Coronavirus crisis, the Automatic BOOST to Communities Act would immediately provide a U.S. Debit Card pre-loaded with US$2000 to every person in America. Each card would be recharged with US$1,000 monthly until one year after the end of the Coronavirus crisis.

“In the long term, the card infrastructure should be converted into a permanent, Treasury administered digital public currency wallet system,” the bill states, “to serve as a privacy-respecting ‘eCash’ complement to universal Fed Accounts and/or Postal Bank Accounts for All.”

While the bill from Representative Tlaib makes a clear use case for cryptocurrencies, some of the bills in congress appear to have differing opinions on cryptocurrency definitions.

On the heels of the announcement of the Facebook backed Libra Project, the "Managed Securities Are Stablecoins Act of 2019" was introduced by Congresswoman Sylvia Garcia, Representative for Texas"s 29th congressional district and Congressman Lance Gooden, Representative for Texas"s 5th congressional district.

“It is the sense of Congress that digital assets, known as managed sta­ble­coins, are investment contracts and therefore are securities,” states the Act. “Issuers of managed stablecoins nevertheless maintain that managed stablecoins are not securities.”

The Act goes on to define “managed stablecoins,” as a digital asset that is not a registered security and either, the market value is determined by reference to the value of a pool or basket of assets, or one or more holders are entitled to obtain payment for the digital asset.

The term “digital asset” is defined as any asset, contract, agreement or transaction, including a representation of an economic, proprietary, or access right, that is “stored in a computer-readable” form, “and has or will have a transaction history that is recorded in a distributed ledger, digital ledger or other digital data structure.”

In the same month, the Commodity Futures Trading Commission Chairman Heath Tarbert indicated that stablecoins may be regulated as commodities.

The "Protecting Consumers From Market Manipulation Act", which was brought forth by Representative or Illinois"s 4th district Jesús “Chuy” García, would result in a much stricter approach to crypto regulation in general.

The bill discusses the requirement of the Financial Stability Oversight Council (FSOC) to consider treating digital currencies as a “designated financial market utility," while adding that a digital asset is not a sovereign currency, “also known as ‘real currency’, ‘real money’, or ‘national currency’.”

The bill requires all non-financial companies making profits from digital currencies to become a Bank Holding Company, which are institutions supervised by the Federal Reserve.

More recently, the "Token Taxonomy Act", has been sponsored by Representative Warren Davidson. The Token Taxonomy Act specifies that “digital tokens, such as those used in virtual currencies,” are not securities for regulatory purposes.

The Token Taxonomy Act attempts to amend the Securities Act of 1933, and the Securities Exchange Act of 1934, to exclude digital tokens from the definition of a security.

"The Blockchain Promotion Act" quickly followed, sponsored by Senator Doris Matsui, Representative for California"s 6th district. This bill directs the formation of a Blockchain Working Group by the Department of Commerce, to present a report to Congress on the various use cases of blockchain, financial and non-financial.

The group will provide a recommended definition of the distributed ledger technology, “commonly referred to as ‘blockchain technology,’ and recommendations for a study on the impact of blockchain technology on “electromagnetic spectrum policy.”

NASA states that, “Spectrum compliance is an enforcement function which involves the monitoring of the use of the radio spectrum and the implementation of measures to control unauthorized use.” NASA does not mention blockchain technology, but states that “ensuring compliance with national spectrum management regulations maximizes the benefit of the spectrum resource to society.”

The Blockchain Promotion Act also requires a study that examines a range of potential applications, including non-financial applications, for blockchain technology, and opportunities within Federal agencies to use blockchain technology.


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