US Senator Introduces Bill Requiring Firms to Report Off-chain Transactions
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A United States senator has introduced a new bill for all crypto-facing businesses to report off-chain transactions to a government agency. This legislation protects customers from fraud and manipulation in the crypto industry.
Off-chain Business Should Reach CFTC’s Ears
US Congressman Don Beyer is bringing up another piece of legislation to protect crypto investors in the nascent industry.
While other legislations have focused on on-chain transactions and illicit movement of funds, Beyer’s bill targets off-chain transactions that use secondary service providers.
According to a press release posted on his official website on September 28, the US Representative is looking at ensuring that all cryptocurrency service providers report both on-chain and off-chain transactions.
These reports would be submitted to a repository officially registered by the Commodity Futures Trading Commission (CFTC).
The bill is titled the “Off-chain Digital Commodity Transaction Reporting Act.” It would require all virtual asset service providers (VASPs) to report their blockchain transactions to a CFTC-registered trade repository.
This must occur within 24 hours, just as it is done for all securities and swap transactions in the country.
Shedding light on the driving force behind this new legislation, Beyer stated that the growing interest in cryptocurrencies makes this a common-sense measure to restore confidence and transparency in the market.
He also provided a background to this new bill, noting that several transactions are conducted offline.
While a number of top crypto trading platforms have strong internal record-keeping practices, it is not the same across all private entities operating in the crypto market.
With transactions occurring off-chain and not recorded on publicly accessible, immutable, and secure blockchain platforms, the risk of investors falling prey to fraud, account discrepancies, and manipulation significantly increases.
Not Beyer’s First Rodeo
Like many of his fellow US Senators, Beyer has been paying close attention to the crypto marketplace since the boom of 2021.
In 2021, he introduced a draft bill to the Senate titled the “Digital Asset Market Structure and Investor Protection Act.” In this proposal, Beyer advocated for the integration of digital assets into the existing financial regulatory framework.
Beyer emphasized that the current regulatory landscape for crypto assets lacked clarity and posed risks to investors, hence the need for a more cohesive approach to the issue.
The bill sought to create statutory definitions of digital assets and virtual asset securities and allow the Securities and Exchange Commission (SEC) to gain oversight of the nascent industry.
Additionally, the bill advocated for the inclusion of digital assets within the existing framework of the Bank Secrecy Act (BSA). It also proposed empowering the Federal Reserve as the sole authority to introduce a tokenized version of the US dollar.
Finally, Beyer’s bill recommended that the Federal Deposit Insurance Corporation (FDIC) and related agencies issue consumer advisories regarding the “noncoverage” of digital assets.
This is to ensure investors are fully aware of the personal risks associated with their engagement in such assets.
