The 116th U.S. Congress convened on January 3, 2019 and will conclude on January 3, 2021 – and while 2020 will represent for millions one of the most unprecedented years in history, Congress has still found time to introduce 40 bills on the subject of cryptocurrencies and blockchain.
Of the 40 bills introduced, 11 have passed the House of Representatives and two have become law. The two laws are part of much larger bills involving the appropriations process where one called for a briefing to Congress on how cryptocurrency affects economic sanctions and another called for a briefing on how the Department of Defense could potentially use blockchain technology.
For the nine bills that passed the House of Representatives but wait action by the U.S. Senate, three bills call for essentially the same action by the Department of Financial Crimes Enforcement Network (FinCEN) to explore blockchain and digital identity technologies to improve the data analysis process and distribution of information to other law enforcement bodies.
The Financial Technology Protection Act of 2019 (H.R. 56), was sponsored by Congressman Ted Budd (R-NC) and Congressman Stephen Lynch (D-MA) and passed the House of Representatives all the way back on January 4, 2019. The bill involved the creation of an, “Independent FinTech Task Force to Combat Terrorism and Illicit Financing” and also offered a reward for terrorists found using digital currencies. The bill was co-sponsored by then Representative Mark Meadows (R-NC), now the current White House Chief of Staff, as well as Congressman Darren Soto (D-FL) and Congressman Warren Davidson (R-NC).
The Homeland Security Assessment of Terrorists’ Use of Virtual Currencies Act sponsored by Representative Kathleen Rice (D-NY) was a bill that also passed the House of Representatives on January 29, 2019. Co-sponsored by Congressman Van Taylor (R-TX), Congressman Peter King (R-NY) and Congressman Brad Sherman (D-CA), the bill asks Homeland Security to conduct an assessment of terrorist use of virtual currencies.
The Fight Illicit Networks and Detect Trafficking Act or the FIND Trafficking Act was introduced in both the House of Representatives and the U.S. Senate by Representative Juan Vargas (D-CA) and Senator Catherine Cortez-Mastro (D-NV). The House version of the bill, H.R. 502, required a report by the Government Accounting Office (GAO) on virtual currency use in sex and drug trafficking. The bill also asked the GAO to examine how the unique characteristics of virtual currencies could be used to track and prosecute the illicit use of cryptocurrency.
Finally, the remaining three bills that made it out of the House of Representatives include the Blockchain Innovation Act (H.R. 8153), The Advancing Blockchain Act (H.R. 6938), and part of the Digital Taxonomy Act (H.R. 2154). The Blockchain Innovation Act and the part of the Digital Taxonomy Act that were sponsored by Congressman Darren Soto (D-FL) were added into the Consumer Safety Technology Act (H.R. 8128) that passed the House of Representatives. On the same day, the American Competitiveness on More Productive Emerging Tech Economy (COMPETE) Act (H.R. 8132) passed the House of Representatives as well. Co-sponsored by Representative Cathy McMorris-Rodgers (R-WA) and Representative Bobby Rush (D-IL), the bill included the language from the Advancing Blockchain Act from Congressman Brett Guthrie (R-KY).
Of the 40 bills, the types of legislation are broken done into four categories. The breakdown by percentage includes the ‘Use of Cryptocurrency by Terrorists, Money Launderers, Human and Sex Traffickers’ at 30%, ‘Regulatory Clarity for Crypto and Blockchain Companies’ at 40%, the ‘Use of Blockchain Technology In Government & Business’ at 22%, and the ‘Digital Dollar’ legislation at 8%. For 30 out of 40 bills (70%) that would either impact cryptocurrency use by criminals or improve cryptocurrency and blockchain regulations, none have successfully become law over the last two years in the U.S.
Thus, the only actions impacting the cryptocurrency and blockchain industry are from agencies or financial regulators themselves, whether it is the recently released ‘Cryptocurrency Enforcement Framework’ by the Department of Justice, enforcement actions from the Securities Exchange Commission (SEC) or Commodity Futures Trading Commission (CFTC), or most notably the recent guidance in the form of interpretive letters released by the Office of the Comptroller of the Currency (OCC).
The first bill introduced in the 116th Congress was extremely interesting when looking back at what has transpired over the last two years in terms of racial strife faced by our nation. On January 3, 2019, Congressman Bobby Rush (D-GA) introduced the ‘RESCUE Act for Black and Community Banks’ that looked to spur growth for minority banks, Black banks, community banks, women’s banks and low-income credit unions. The bill included a ‘blockchain study’ to be carried out by the Comptroller General of the GAO to see, “whether such technology could be used to increase investment by lower-income individuals in startups and other crowd-funded companies”.
Rush also later introduced, as shown above, one of the bills (American COMPETE Act) that successfully passed the House of Representatives in dealing with how the U.S. will compete with China on emerging technologies such as blockchain. While there are typically the ‘usual suspects’ in Congress that introduce the majority of legislation, which include Congressman Tom Emmer (R-MN), Congressman Darren Soto (D-CA), Congressman Warren Davidson (R-NC), Congressman Ted Budd (R-NC), as well as Congressman David Schweikert (R-AZ) and Congressman Bill Foster (D-IL). Emmer, Soto, Schweikert, and Foster are Co-Chairs of the Congressional Blockchain Caucus and have also played a critical role in sending letters to get the attention of the administration on these technologies as well.
For example, Soto led the charge on a letter last year to the National Economic Council asking the White House to hold a forum on blockchain, and this year asked the U.S. Treasury Secretary to evaluate blockchain for speeding up the processing of Covid-19 stimulus checks and wrote President Trump on the criticality of this technology as well. Foster, along with Congressman French Hill (R-AZ), wrote a letter last year asking the Federal Reserve what types of efforts the central bank had started to take in terms of investigating a central bank digital currency (CBDC).
A full report of all 40 bills with corresponding research will be released toward the end of 2020 by the Value Technology Foundation, a 501(c)(3) non-profit research think tank on blockchain and cryptocurrency in Washington D.C.