WASHINGTON—A new bill in the House of Representatives aims to require cryptocurrency service providers to report all blockchain transactions to a government repository.
Rep. Don Beyer (D-VA) has introduced the Off-Chain Digital Commodity Transaction Reporting Act, requiring trading platforms to report all transactions to a repository registered with the Commodity Futures Trading Commission.
According to an analysis by FXStreet.com, the new legislation aims to protect cryptocurrency investors from disputes, manipulation or fraud potentially stemming from transactions occurring off-chain or transactions that take place beyond the blockchain network. Unlike on-chain transactions, off-chain crypto transactions are not instantly logged on a blockchain but are processed through secondary layers, thus creating some difficulties in being tracked, FXStreet added.
‘Off-Chain’ Transactions
With the emergence of trading platforms and a desire to increase transaction times and lower costs, thousands of transactions occur “off-chain” and are unrecorded on the publicly viewable blockchain, according to the report.
“Unfortunately, internal record keeping among these private entities can vary wildly, and this can leave investors and consumers vulnerable to fraud and manipulation,” Beyer wrote. “This bill is a common-sense measure to restore some transparency and confidence to the digital asset market.”
What the Bill Would Require
According to the bill, crypto service providers will be required to report all off-chain transactions within 24 hours to a CFTC-registered trade repository. The announcement notes that the requirements are similar to the rules for “virtually all securities and swaps transactions,” FXStreet said.
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