Last week, two US lawmakers introduced a bill dubbed the "Blockchain Promotional Act 2018" in the House of Representatives. Its main purpose is to establish a common definition of ‘blockchain’ technology along with a blockchain working group that would potentially overview studies for federal adoption of the technology.
Here’s what the bill might mean for the US regulatory landscape, which has been (albeit significantly slowly) moving towards recognizing the industry over the past few months.
What do we know about the ‘Blockchain Promotional Act 2018’?
The document was introduced by two members of the House of Representatives — California democrat Doris Matsui and Kentucky republican Brett Guthrie — on September 26. Matsui first announced she was working on such legislation during a House Energy and Commerce Committee Subcommittee on Digital Commerce and Consumer Protection hearing in July 2018:
“I’ve discussed the potential of blockchain applications in this subcommittee before,” Matsui stated. “These include its possibility to facilitate spectrum sharing as next generation broadband networks are deployed, maintain patient health records, and secure business transactions and communications between Internet of Things networks.”
Further, Matsui stressed that she believes a common definition will help drive innovation and ease deployment across both the public and private sectors, while the technology’s growing popularity leads to distortion of its definition:
“In its basic and essential element and function, blockchain is a decentralized ledger technology [...] But as the hype surrounding blockchain and its applications grow, how exactly blockchain is defined has become less clear. More fundamentally, there is no agreed upon definition of ‘blockchain.’”
Why a common definition of blockchain is important for the regulatory landscape
Matsui and Guthrie’s bipartisan bill follows the Information Security and Privacy Advisory Board (ISPAB) meeting that occured on June 25. During the session,
Tiffany Angulo, a staff co-chair of the Congressional Blockchain Caucus (a platform for the industry and government collaboration to examine the implications of blockchain and virtual currencies), warned that blockchain development could turn into a “patchwork system”, because states pass laws with different definitions of the technology. Angulo argued that blockchain required greater federal guidance and standardization to ensure that the technology is applicable across the nation:
“If you’re an insurance broker and you have contracts in different states, you’re going to have different regulations in each state.”
Interestingly, California, and Arizona, two states who have passed their blockchain-related bills, have used the same definition of blockchain. Thus, both California’s Assembly Bill 2658 and Arizona’s House Bill 2602 define blockchain technology as a “distributed ledger technology that uses a distributed, decentralized, shared, and reciprocal ledger, that may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless. The data on the ledger is protected with cryptography, is immutable, is auditable, and provides an uncensored truth.”
How the ‘Blockchain Promotional Act 2018’ attempts to tackle blockchain-related issues
The new bill proposes that the U.S. Department of Commerce create a working group formed both by federal officials and members of the blockchain industry to form a common definition of blockchain.
According to the press release published on Matsui’s website, the working group will also consider recommendations for the National Telecommunications and Information Administration (NTIA) and Federal Communications Commission (FCC) to study the potential impact of blockchain on spectrum policy and opportunities for federal adoption of the technology. Matsui further explained the main purpose of the bill, citing the technology’s potential:
"Blockchain technology could transform the global digital economy. Opportunities to deploy blockchain technology ranges from greatly increased transparency, efficiencies and security in supply chains to more-opportunistically managing access to spectrum."
More action in Congress: the long road to federal regulation
Matsui and Guthrie join other congresspeople who have been calling for federal legislation for cryptocurrencies and blockchain. Thus, in September, Minnesota republican Tom Emmer who is also a co-chair of the Congressional Blockchain Caucus, announced three upcoming bills on the matter.
Dubbed the “Resolution Supporting Digital Currencies and Blockchain Technology” the “Blockchain Regulatory Certainty Act” and the “Safe Harbor for Taxpayers with Forked Assets Act”, the legislations focus on the support and development of blockchain, as well as the establishment of a safe harbor for taxpayers with “forked” digital assets. Emmer further commented on the initiative:
“The United States should prioritize accelerating the development of blockchain technology and create an environment that enables the American private sector to lead on innovation and further growth, which is why I am introducing these bills.”
Around the same time, a group of more than a dozen lawmakers from Congress sent a letter to Securities and Exchange Commission (SEC) Chairman Jay Clayton, calling for regulatory clarity regarding cryptocurrencies. The congressmen urged Clayton to tell investors how the SEC plans to regulate virtual currencies:
"It is important that all policy makers work toward developing clearer guidelines between those digital tokens that are securities, and those that are not, through better articulation of SEC policy, and, ultimately, through formal guidance or legislation."
Ironically, it seems that the current problem with regulation in the US is two-sided: regulating bodies like the SEC and Commodity Futures Trading Commission (CFTC), whom congressmen ask for clarity on their stance towards cryptocurrencies, have been continuously extending their purview within the crypto industry during the past few months.
However, they move with extra caution, citing the absence of comprehensive crypto legislation coming anytime soon. For instance, CFTC’s Chairman Christopher Giancarlo have stated that he doesn’t see such a framework coming from the federal level in the near future, pointing out that the statutes by which the CFTC is operating were written in 1935, and embracing something “as new and as innovative” as Bitcoin within such terms will take time.
The bipartisan bill introduced by Matsui and Guthrie, if approved, could ease government's interaction with blockchain and potentially make the industry more attractive for local mainstream businesses who will get an official definition for the technology, and thus more options to explore it.
Nevertheless, it is impossible to tell if the bill is going to be approved at this point, and what precise impact it will have on the US legal system and crypto market. Cointelegraph has reached out to the DC-based non-profit industry-oriented outlets Blockchain Association and Coin Center for further comment. The latter has not replied to date, while the Blockchain Association representative limited his answer by sharing the following statement:
“We believe in the transformative potential of this technology and as this new working group comes together we look forward to continued collaboration with Congress to push for responsive regulation that spurs innovation and protects consumers."