Crypto Transparency Act
A fresh legislative proposal has surfaced in the United States targeting the regulation of cryptocurrency transactions. The proposed bill, known as the "Digital Transaction Transparency Act," mandates that providers of cryptocurrency services should report all blockchain transactions to a designated government database.
Representative Don Beyer unveiled this initiative on September 28, proposing the "Digital Commodity Transactions Oversight Act," which calls for trading platforms to submit transaction records to a repository endorsed by the Commodity Futures Trading Commission.
The primary objective of this new legal framework is to safeguard the interests of cryptocurrency investors by addressing potential conflicts, manipulation, or fraudulent activities linked to off-chain transactions or those occurring outside the blockchain network. Unlike transactions recorded on the blockchain, off-chain crypto transactions are not immediately logged within the blockchain but are instead processed through additional layers, posing tracking challenges.
Given the rise of trading platforms and the push for faster transactions and reduced costs, a considerable number of transactions are executed "off-chain" and remain invisible on the public blockchain, as highlighted in the announcement.
"Regrettably, the internal record-keeping practices within these private entities vary significantly, exposing investors and consumers to potential fraud and manipulation," Beyer remarked, emphasizing the necessity of the proposed bill.
He further underscored, "This legislation represents a sensible step toward reinstating transparency and bolstering confidence within the digital asset market."
Under the proposed legislation, cryptocurrency service providers will be obliged to report all off-chain transactions within 24 hours to a trade repository registered with the CFTC. The announcement emphasizes that these requirements mirror the regulations governing "virtually all securities and swaps transactions."
Recent times have witnessed a heightened focus from U.S. lawmakers on the realm of cryptocurrency regulations. In mid-September, nine U.S. senators voiced their support for Senator Elizabeth Warren's Digital Asset Anti-Money Laundering Act. This legislation, reintroduced in July 2023, aims to curb the misuse of digital money by targeting noncustodial digital wallets and extending the responsibilities outlined in the Bank Secrecy Act, among other legal measures.
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