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Three good crypto bills moved forward
Plus one bad bill was introduced and we had a setback in court
It has been an exceptionally active month for crypto policy in Congress. Several House bills that we have worked on were passed out of committee and are now poised for a floor vote.
The Financial Innovation and Technology for the 21st Century Act was passed out of both the Financial Services and Agriculture committees on a bipartisan basis. Previous drafts of the bill were ambiguous on whether publishing code could be a trigger for regulation. Our efforts not only clarified this, but resulted in a clear exemption.
The Clarity for Payment Stablecoins Act also incorporates our guidance that stablecoins comprised purely of software not be subject to covered by regulation.
The Blockchain Regulatory Certainty Act has gone under the radar for some, but it would ensure in law a crucial protection for software developers and other non-custodial blockchain services (like miners and multisig providers) by creating a safe harbor and exempting them not only from money state transmission licensing, but also FinCEN registration. The idea was first proposed by Coin Center back in 2016 and we’ve been working with Reps. Emmer and Soto ever since to make it a reality.
This progress has been the culmination of years of engagement with Congress. We will continue our work to drive good bills forward and into law.
Now for some bad news. The judge in our lawsuit against Treasury and the IRS over the crypto amendment to Section 6050I of the tax code granted the government’s motion to dismiss our case. In large part the basis for dismissal was lack of ripeness (i.e. suggesting we brought it too early since the law doesn’t go into effect until Jan. 1, 2024).
We disagree with the judge’s opinion and consequently we’ve immediately filed notice of our intention to appeal to the Sixth Circuit Court of Appeals.
This is a setback but we’re confident we’ll get our full day in court. In the meantime, you should be getting ready for the reality that starting Jan 1 recipients of crypto payments of $10,000 or more in the course of business (broadly interpreted) will have to report to the government not just the transaction, but the PII of the sender as well–all without a warrant.
Senators Reed, Rounds, Warner, and Romney have introduced the Crypto-Asset National Security Enhancement (CANSEE) Act. While we understand the Senators’ desire to combat the abuse of crypto protocols by criminal and enemy actors, the bill would make the development of such protocols in the U.S. and by U.S. persons unfeasible. Worse, the bill would be unconstitutional legislation as it would clearly violate the First Amendment. We’re on the case and will do everything in our power to stop it.
Bottom line, we not only think it was the correct decision, but we note that the judge employed the exact framework for interpreting Howey in the context of crypto that we have been advocating for since we presented it to the SEC in 2016. Essentially, tokens are never investment contracts themselves but can be the subject of investment contracts.
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