A nonprofit crypto advocacy group says that a stablecoin bill proposed earlier this week by two US senators would violate free speech rights. In a new article, Coin Center says that the bipartisan stablecoin bill – proposed by Republican Senator Cynthia Lummis of Wyoming and Democrat Senator Kirsten Gillibrand of New York – is unconstitutional […]
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A new bill co-sponsored by Senators Cynthia Lummis and Kirsten Gillibrand, aimed at regulating stablecoins, has drawn criticism for potentially stifling innovation and breaching First Amendment rights. The bill includes a provision that bans all “algorithmic payment stablecoins,” which could have significant implications for software developers and the broader tech community. Lummis-Gillibrand Stablecoin Bill Criticized […]
A prominent crypto advocacy group says that new crypto tax regulations have come into effect that are impossible to comply with. In a new press release, Coin Center says that The Infrastructure Investment and Jobs Act, which passed Congress in 2021, came into effect on January 1st and will force anyone who receives more than […]
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Coin Center said the bill was unconstitutional, while the Blockchain Association called it incompatible with blockchain technology.
Crypto industry advocacy bodies have slammed a newly proposed United States Senate bill for what they say is a confused approach to regulating the decentralized finance (DeFi) sector.
On July 20, crypto think tank Coin Center and crypto advocacy group the Blockchain Association released separate statements describing the legislation as a “messy," "unworkable," and "unconstitutional” way of regulating DeFi.
Introduced on July 18, the bipartisan Crypto-Asset National Security Enhancement Act (CANSEE) bill aims to reign in money laundering violations in DeFi.
If passed, the legislation would extend new penalties to anyone who “controls” or “makes available an application designed to facilitate transactions using a digital asset protocol.” They would also be required to adhere to anti-money laundering and financial reporting standards.
The definition of who or what “controls” a DeFi protocol was left to be made by the U.S. Secretary of the Treasury — a move some pundits say will lead to excessive controls being applied to DeFi.
In its July 20 blog post, Coin Center wrote the bill gives “virtually unbounded discretion to the Secretary to decide what it would take to designate one as having ‘control’ of a protocol.”
Additionally, the think tank declared the bill to be unconstitutional as it would crack down on software developers who — as an extension of free speech — have a First Amendment right to publish code.
We've looked at the new bill by @SenJackReed, @SenatorRounds, @SenatorWarner,
— Jerry Brito (@jerrybrito) July 20, 2023
and @SenatorRomney that would extend sanctions penalties and AML obligations to developers of decentralized protocols. It's unconstitutional and ill-considered. Our analysis: https://t.co/TR2rsAAQHK
Coin Center was also concerned with the scope of the legislation and said by design DeFi is decentralized — meaning it could prove legally troublesome to enforce control over a given protocol.
Related: Liquid staking claims top spot in DeFi: Binance report
Kristin Smith, the CEO of the Blockchain Association echoed Coin Center’s concerns and described the new legislation as unworkable.
Blockchain Association CEO @KMSmithDC released the following statement following today's introduction of the Crypto-Asset National Security Enhancement Act of 2023:
— Blockchain Association (@BlockchainAssn) July 19, 2023
“The Crypto-Asset National Security Enhancement Act of 2023, introduced today by Sen. Jack Reed (D-RI), is an… pic.twitter.com/S65XSUheTW
Smith took aim at the bill for overstating the presence of money laundering in DeFi and crypto more broadly.
“At present, illicit transactions represent a small fraction of total volume: only 0.24% of all digital asset transactions in 2022, far less than in traditional finance.”
Smith said federal law enforcement agencies are already equipped with the tools and expertise to combat this “relatively small but important issue.” Ultimately, Smith denounced the new punitive measures in the bill as redundant.
While crypto organizations have taken aim at the broad scope of the bill, an April 7 U.S. Treasury report found many DeFi protocols are more centralized than claimed, often featuring a high concentration of funds and voting power in the hands of a few token holders.
Magazine: How smart people invest in dumb memecoins — 3-point plan for success
Blockchain Association, a nonprofit group dedicated to crypto advocacy, is filing a second amicus brief in support of the banned crypto mixer Tornado Cash. In a new announcement, the group says it is filing an amicus brief in favor of Coin Center’s lawsuit against the Office of Foreign Asset Control (OFAC), arguing that the regulatory […]
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Cryptocurrency and technology proponents have recently been discussing a new bipartisan bill called the “Restricting the Emergence of Security Threats that Risk Information and Communications Technology (RESTRICT)” Act. In addition to targeting firms such as Kaspersky, Huawei, and Tiktok, opponents of the bill believe one of its provisions will punish ordinary Americans for leveraging a […]
U.S. Republican Representative Patrick McHenry called for clarification on a “poorly” written digital asset tax provision in a letter to the Treasury.
The incoming United States House Financial Services Committee chair, Patrick McHenry, wants the Treasury to delay implementing a section of the Infrastructure Investment and Jobs Act that deals with digital assets and tax collection.
McHenry sent a letter on Dec. 14 to U.S. Treasury Secretary Janet Yellen with questions and concerns about the scope of Section 80603 of the act. In the letter, he requested clarification over the “poorly drafted” and potentially privacy-compromising section that deals with the taxation of digital assets, scheduled to go into effect next yea.
He said the section requires the government to treat digital assets as the equivalent of cash for tax purposes, which could “jeopardize” the privacy of Americans and hamp innovation.
The section, called "Information Reporting for Brokers and Digital Assets," requires brokers to report certain information relating to dealing with digital assets to the Internal Revenue Service (IRS).
McHenry argues the section has been drafted badly and that the term “brokers” could be “wrongly interpreted” as applying to a wider range of people and companies than intended.
The Act contains a provision requiring individuals or entities engaging in a trade or business to report to the IRS any digital asset transactions that exceed $10,000.
The requirement was challenged earlier this year by Coin Center, a nonprofit advocacy group focused on blockchain technology, which filed a lawsuit against the Treasury arguing that the rule will impose a “mass surveillance” regime on U.S. citizens.
Related: Sens. Warren and Marshall introduce new money-laundering legislation for crypto
According to Fordham International Law Journal, the section is likely to impose reporting requirements on the major cryptocurrency exchanges that already have user information, including customers' names, addresses and social security numbers.
McHenry acknowledged it was a positive step forward to see the Treasury Department state that “ancillary parties” should not be subject to the same reporting requirements as brokers.
In February, U.S. Senator Rob Portman tweeted a letter from U.S. Assistant Secretary for Legislative Affairs Jonathan Davies that clarified that parties such as crypto miners and stakers are not subject to the new legislation.
McHenry's letter concluded by requesting the Treasury “immediately” publish the rules under the section and delay its effective date to give market participants time to comply with any new requirements.
It’s the second letter McHenry has sent to Yellen this year, having sent her a letter on Jan. 26 urging the Treasury secretary to clarify the definition of a broker.
A cryptocurrency-focused advocacy group is challenging the validity of the US sanction against crypto mixing service Tornado Cash. On August 8th, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) imposed a ban on Tornado Cash citing that the protocol is used in illicit activities such as money laundering and terrorism. The non-profit group […]
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The non-profit that focuses on policy issues facing cryptocurrencies, Coin Center, has filed a lawsuit against the Treasury department, the secretary of the Treasury Janet Yellen, and the Office of Foreign Assets Control’s (OFAC) director Andrea Gacki. Coin Center’s court filing says that the government’s sanctioning of Tornado Cash exceeds the Treasury’s statutory authority. The […]