Crypto and Congress: A Guide to Virtual Currency Bills

With more than a dozen bills introduced in the first three months of 2019, the 116th Congress seems eager to take on cryptocurrency regulation through a wide range of legislative proposals that will impact both virtual currency and blockchain technology. While none of these are sure to pass, a guide to current legislation could still be a useful resource to those in the blockchain and policy communities. This list will be periodically updated in subsequent posts. Additional analysis of specific bills and regulatory proposals will appear separately.

By Ashley Baker

Crime Prevention & Detection

H.R. 502: Fight Illicit Networks and Detect Trafficking Act (“FIND Trafficking Act”)

Purpose: To require the Comptroller General of the United States to carry out a study on how virtual currencies and online marketplaces are used to buy, sell, or facilitate the financing of goods or services associated with sex trafficking or drug trafficking, and for other purposes.

Introduced: January 11, 2019

Sponsor: Rep. Juan Vargas (D-CA)

Co-sponsor(s): Rep. Ann Wagner (R-MO), Rep. Brian Fitzpatrick (R-PA), Rep. Cynthia Axne (D-IA)

Status: On January 28, H.R. 502 was passed by a vote of 412-3 in the House through a motion to suspend the rules and agree to the bill.

Summary: The FIND Trafficking Act, if passed in the Senate, will direct the Government Accountability Office (GAO) to report on the use of virtual currencies and online marketplaces in sex and drug trafficking following a study conducted by the Office of the Comptroller General. The study must evaluate how illicit proceeds are transferred from overseas into the U.S. banking system and the extent to which the immutable and traceable nature of virtual currencies can contribute to the tracking and prosecution of illicit funding.

The Comptroller General must also assess preventative efforts by federal or state agencies to impede the transfer of funds to, from, or within the United States that are meant to buy, sell, or finance sex or drug trafficking. A report summarizing the results of the study — along with recommendations for legislative or regulatory action — must be submitted by the Comptroller General to the House Committee on Banking, Housing, and Urban Affairs within one year of enactment.

S. 410: Fight Illicit Networks and Detect Trafficking Act (“FIND Trafficking Act”) (H.R. 502 Companion Bill)

Purpose: See above.

Introduced: February 7, 2019

Sponsor: Sen. Catherine Cortez Masto (D-NV)

Co-Sponsor(s): Sen. Pat Toomey (R-PA)

Status: Referred to the Committee on Banking, Housing, and Urban Affairs.

Summary: See above.

H.R. 1387: Criminal Organizations’ Narcotics, Finances, Resources, Operations, and Networks Targeting (CONFRONT) Act

Purpose: To require the President to develop a national strategy to combat the financial networks of transnational organized criminals, and for other purposes.

Introduced: February 27, 2019

Sponsor: Rep. David Kustoff (R-TN)

Co-sponsor(s): Rep. Bill Foster (D-IL), Rep. Josh Gottheimer (D-NJ)

Status: Referred to the House Committee on Financial Services.

Summary: This bill would create a national strategy to combat the financial networks of transnational organized criminals. The strategy must include an assessment of methods by which transnational organized crime groups launder illicit proceeds, including money laundering using real estate and other tangible goods such as art and antiquities, trade-based money laundering, bulk-cash smuggling, exploitation of shell companies, and misuse of digital currencies and other cyber technologies, as well as an assessment of the risk to the financial system of the United States of such methods.

National Security & Terrorism

H.R. 1414: FinCEN Improvement Act of 2019

Purpose: To amend the duties of the Financial Crimes Enforcement Network (FinCEN) to ensure FinCEN works with Tribal law enforcement agencies, protects against all forms of terrorism, and focuses on virtual currencies.

Introduced: February 27, 2019

Sponsor: Rep. Jennifer Wexton (D-VA)

Co-sponsor(s): Rep. Denver Riggleman (R-VA), Rep. Van Taylor (R-TX)

Status: On March 11, H.R. 1414 was passed by voice vote in the House through a motion to suspend the rules and agree to the bill.

Summary: If passed in the Senate, this bill will extend the authority of FinCEN by amending 31 U.S. Code § 310 by striking “anti-terrorism and anti-money laundering initiatives, and similar efforts’’ and inserting ‘‘anti-terrorism and anti-money laundering initiatives, including matters involving emerging technologies or value that substitutes for currency, and similar efforts.’’ The findings behind this change are that: “Although the use and trading of virtual currencies are legal practices, some terrorists and criminals, including international criminal organizations, seek to exploit vulnerabilities in the global financial system and are increasingly using emerging payment methods such as virtual currencies to move illicit funds.”

S. 582: FinCEN Improvement Act of 2019 (H.R. 1414 Companion Bill)

Purpose: See above.

Introduced: February 27, 2019

Sponsor: Sen. Catherine Cortez Masto (D-NV)

Co-sponsor(s): Sen. Bill Cassidy (R-LA), Sen. Kyrsten Sinema (D-AZ), Sen. Jerry Moran (R-KS), Sen. Elizabeth Warren (D-MA)

Status: Referred to the Committee on Banking, Housing, and Urban Affairs.

Summary: See above.

H.R. 428: Homeland Security Assessment of Terrorists’ Use of Virtual Currencies Act

Purpose: To direct the Under Secretary of Homeland Security for Intelligence and Analysis to develop and disseminate a threat assessment regarding terrorist use of virtual currency.

Introduced: January 10, 2019

Sponsor: Rep. Kathleen Rice (D-NY)

Co-sponsor(s): Rep. Peter King (R-NY), Rep. Van Taylor (R-TX), Rep. Brad Sherman (D-CA)

Status: On January 29, H.R. 428 was passed by a vote of 422-3 in the House through a motion to suspend the rules and agree to the bill. It was then received in the Senate and referred to the Committee on Homeland Security and Governmental Affairs.

Summary: The Homeland Security Assessment of Terrorists’ Use of Virtual Currencies Act, if passed in the Senate, will require the Department of Homeland Security’s Office of Intelligence and Analysis to coordinate a federal effort to develop a threat assessment regarding the actual and potential threat posed by individuals using virtual currency to support or carry out acts of terrorism. The assessment shall be shared with state, local, and tribal law enforcement officials.

H.R. 56: The Financial Technology Protection Act

Purpose: To establish an Independent Financial Technology Task Force to Combat Terrorism and Illicit Financing, to provide rewards for information leading to convictions related to terrorist use of digital currencies, to establish a Fintech Leadership in Innovation and Financial Intelligence Program to encourage the development of tools and programs to combat terrorist and illicit use of digital currencies, and for other purposes.

Introduced: January 3, 2019

Sponsor: Rep. Ted Budd (R-NC)

Co-sponsor(s):Rep. Stephen Lynch (D-MA), Rep. Mark Meadows (R-NC), Rep. Soto, Darren (D-FL), Rep. Warren Davidson (R-OH)

Status: On January 29, H.R. 56 was passed by voice vote in the House through a motion to suspend the rules and agree to the bill. It was then received in the Senate and referred to the Committee on Banking, Housing, and Urban Affairs.

Summary: The Financial Technology Protection Act, if passed in the Senate, would create an inter-agency taskforce, led by the Secretary of the Treasury, to conduct research on new financial technologies (e.g., digital currencies) and their use in terrorism and other illicit activities. H.R. 56 would establish an “Independent Financial Technology Task Force to Combat Terrorism and Illicit Financing”, which must research terrorist and illicit use of new financial technologies and issue an annual report, and the “FinTech Leadership in Innovation and Financial Intelligence Program” to provide funds to support the development of tools and programs to detect terrorist and illicit use of digital currencies.

The bill also creates a bounty program for any person who provides information leading to the conviction of an individual involved with terrorist use of digital currencies. Additionally, the bill directs the Treasury Secretary, along with other relevant agencies, to submit a report to Congress that describes the potential uses of digital currencies and other emerging technologies by states, non-state actors, and foreign terrorist organizations to evade sanctions, finance terrorism, or launder monetary instruments, and threaten United States national security. The report must include a strategy to mitigate and prevent such illicit use of digital currencies and other related emerging technologies.

Regulatory Certainty

S. 553: Blockchain Promotion Act of 2019

Purpose: To direct the Secretary of Commerce to establish a working group to recommend to Congress a definition of blockchain technology, and for other purposes

Introduced: February 26, 2019

Sponsor: Sen. Todd Young (R-IN)

Co-sponsor(s): Sen. Edward Markey (D-MA)

Status: Referred to Senate Committee on Commerce, Science, and Transportation.

Summary: The Blockchain Promotion Act directs the Secretary of Commerce to establish within the Department of Commerce a multi-stakeholder “Blockchain Working Group.” The Secretary will designate federal agencies to be represented on the working group to ensure representation of those that could use or benefit from blockchain technology. The head of each of these agencies shall appoint an officer or employee to serve as a member of the working group.

Additionally, the group will include nongovernmental stakeholders including, but not limited to, researchers, industry representatives, small businesses, and nonprofit organizations and advocacy groups. Within a year, the Blockchain Working Group will recommended to Congress a definition of “blockchain technology.” Additionally, the report will make recommendations for (a) a joint DOC-FCC study on the impact of blockchain technology on electromagnetic spectrum policy, (b) a study that examines a range of potential applications, including non-financial applications, for blockchain technology, and (c) opportunities within federal agencies to use blockchain technology.

H.R. 1361: Blockchain Promotion Act of 2019 (S. 553 Companion Bill)

Purpose: See above.

Introduced: February 26, 2019

Sponsor: Rep. Doris O. Matsui (D-CA)

Co-sponsor(s): Rep. Brett Gurthrie (R-KY)

Status: Referred to the House Committee on Energy and Commerce and the House Committee on Oversight and Reform.

Summary: See above.

H.R. 528: Blockchain Regulatory Certainty Act

Purpose: To provide a safe harbor from licensing and registration for certain non-controlling blockchain developers and providers of blockchain services.

Introduced: January 14, 2019

Sponsor: Rep. Tom Emmer (R-MN)

Co-sponsor(s): Soto, Darren (D-FL)

Status: Referred to the House Financial Service Committee and the House Judiciary Subcommittee on Courts, Intellectual Property, and the Internet and the Judiciary Subcommittee on Crime, Terrorism, and Homeland Security.

Summary: The Blockchain Regulatory Certainty Act would create a safe harbor by exempting from certain financial reporting and licensing requirements blockchain developers and providers of blockchain services that do not have control over consumer assets via the service or software created. This bill would preempt state and federal law so that no blockchain developer or provider of blockchain services that meet this requirement would be treated as a money transmitter, money services business, financial institution, or any other state or federal legal designation requiring licensing or registration as a condition to acting as a blockchain developer or provider of a blockchain service. H.R. 6974 (115th) was a previous version of this bill.

Consumer Protection

H.R. 922: Virtual Currency Consumer Protection Act of 2019

Purpose: To promote fair and transparent virtual currency markets by examining the potential for price manipulation.

Introduced: January 30, 2019

Sponsor: Rep. Soto, Darren (D-FL)

Co-sponsor(s): Rep. Tedd Budd (R-NC), Rep. Warren Davidson (R-OH), Rep. Bonnie Watson Coleman (D-NJ)

Status: Referred to House Financial Services Committee and House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit.

The report must also contain an analysis of whether the CFTC possesses the appropriate statutory authority to conduct surveillance of virtual currencies for signs of manipulation and bring enforcement actions against persons involved in any such manipulation. Additionally, the CFTC chairman include any recommendations for legislative changes.

U.S. Competitiveness & Economic Prosperity

H.R. 923: U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2019

Purpose: To promote United States competitiveness in the evolving global virtual currency marketplace.

Introduced: January 30, 2019

Sponsor: Rep. Soto, Darren (D-FL)

Co-sponsor(s): Rep. Tedd Budd (R-NC), Rep. Warren Davidson (R-OH), Tom Emmer (R-MN)

Status: Referred to the House Financial Services Committee and the House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit.

Summary: This bill directs the CFTC Chairman to consult with the heads of the SEC and other relevant agencies to submit to the House Committees on Agriculture and on Financial Services and the Senate Committees on Agriculture, Nutrition, and Forestry and on Banking, Housing, and Urban Affairs a report on the state of virtual markets and ways to promote American competitiveness. The study must examine the regulation of the U.S. virtual currency industry compared to the regulatory environment in foreign countries and assess the potential benefits of blockchain technology in the U.S. Commodities market. The subsequent report must include legislative recommendations to give the CFTC and other relevant Federal agencies the proper authority to promote U.S. competitiveness and to encourage the growth of adoption of virtual currencies in segments of the commodity market.

Additionally, this bill instructs the CFTC Chairman to clarify the virtual currencies that qualify as commodities for both existing currencies and ones that may be created in the future, and then provide a new, optional regulatory structure for virtual currency spot markets. H.R. 7225 (115th) was a previous version of this bill.

Note: The Government Blockchain Association (GBA) takes no particular policy positions. Any views expressed here are solely that of the author. Nothing written here should be interpreted as legal or financial advice.

Learn more about GBA: https://gbaglobal.org/gba-staging/about/

Like us on Facebook: https://www.facebook.com/GBAGlobalOfficial/