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United States Congressional Bill Bans Venezuela’s Petro, Calls for Global Investigation of Crypto

Just days after Venezuela announced that they are initiating a public sale of the Petro on 5 November 2018, and have completely re-designed it to be an X11 crypto like Dash, the United States Congress has put forth a bill which will completely ban the Petro. In addition, the bill calls for an international investigation of all other cryptocurrencies designed to circumvent international sanctions.

The Venezuelan Petro was already banned by an Executive Order from President Trump of the United States on 19 March 2018. This bill is similar to the executive order, but cements the Petro ban into congressional law and expands on the ban. The primary reason the Petro is being banned by the United States is that the Petro will likely be used to circumvent international sanctions.

The bill is titled Venezuelan Humanitarian Relief, Reconstruction and Rule of Law Act of 2018, and is a bill with many new laws and efforts concerning Venezuela, with a sub-section on cryptocurrency towards the end of the bill. The ban on Petro specifically says “All transactions by a United States person or within the United States that relate to, provide financing for, provide software for, or otherwise deal in any digital currency, digital coin, or digital token, that was issued by, for, or on behalf of the Government of Venezuela are prohibited beginning on the date of the enactment of this Act.” All agencies of the United States government are given permission to enforce this law. The penalties of breaking the law are unknown at this point, but violating this law could be equivalent to an act of treason.

Further, the United States Congress is calling for a global investigation of any cryptocurrency that is being used to violate international sanctions. Specifically, efforts by states, state-sponsored actors, and non-state sponsored actors to circumvent or evade United States sanctions with crypto will be investigated, and the report submitted to Congress within 6 months. The report will include recommendations on how to inhibit crypto from compromising sanctions.

It will certainly be interesting to watch how Venezuela’s Petro survives in the face of the full weight and power of the United States government. This will be a true test of X11 crypto’s ability to send anonymous and secure transactions.

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Bipartisan Common Blockchain Definition Bill Presented by US Legislators

A bill proposed to the US House of Representatives by two legislators is seeking to establish a “consensus-based definition of blockchain”.

Defining moment

Titled “Blockchain Promotion Act of 2018”, the bill was produced by Congresswoman Doris Matsui and Congressman Brett Guthrie. They are members of the Energy and Commerce Subcommittee on Communications and Technology and Digital Commerce and Consumer Protection.

Introduced on 1 October, the bill intends to have the Department of Commerce create a working group of stakeholders within the government and private entities in order to achieve this consensus and study the technology further.

According to a press release, the “bi-partisan” bill comes with recommendations for the National Telecommunications and Information Administration (NTIA) and the Federal Communications Commission (FCC) to further examine and study the impact of blockchain technology “on spectrum policy and opportunities for the adoption of blockchain to promote efficiencies within the Federal government”.

Matsui describes the technology as transformative for the global digital economy, citing “greatly increased transparency, efficiencies, and security in supply chains to more-opportunistically managing access to spectrum”, as blockchain deployment opportunities.

Battling for blockchain

Efforts to establish definitions of cryptocurrency alone in the United States have been ongoing and come up against significant barriers set in place by the Securities and Exchange Commission (SEC). Enterprises, innovations and federal entities are making the push to make US laws more accommodating for blockchain.

Cryptocurrencies in the states are generally classified as securities. Bitcoin and Ethereum don’t qualify as securities as they are decentralized, though this has prompted a backlash from the blockchain industry. In addition to this, the Chamber of Digital Commerce (CDC) published a paper that offers a guide on digital tokens for law and policymakers.

Currently, initial coin offerings are tricky to operate in the US as they require tedious and lengthy application processes to be permitted by the SEC, who known to be firm with unlicensed ICO traders.

The SEC is being pressed by the United States Congress clarify crypto security guidelines, a factor of which is having effects on the establishment and operation of domestic enterprises. In a letter to the SEC, Congress claims the SEC’s lack of clarification could cause the country to fall behind in the crypto and financial technology sectors.

Pressing matters

Over the summer, a Congressional hearing saw the Chairman of the Commodity Futures Trading Commission (CFTC) speak up against the lack of suitable laws that allow the CFTC to participate in Proof-of-Concept blockchain tests. He said that due to bureaucracy, industry innovation is being stifled in the US.

A few weeks ago, blockchain companies formed “The Blockchain Association“, a lobbying group with the intention of representing entrepreneurs as well as investors who wish to navigate US laws compliantly. The group also wishes to see the present issues of cryptocurrency taxation and classification addressed. Coinbase, Circle, Polychain Capital, Digital Currency Group and Protocol Labs are the founding members.

In the Blockchain Promotion Act of 2018 press release, Congressman Brett Guthrie says:

“Blockchain can be a great resource for innovation and technology, but we must figure out exactly what best common definition is and how it can be used. I was proud to join my colleague Congresswoman Doris Matsui to introduce the Blockchain Promotion Act to better understand blockchain and its role in our digital economy.”

 

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Congress Requests SEC Clarify Crypto Security Laws to Support Innovation

The United States Congress has sent a letter to the Securities and Exchange Commission (SEC) requesting that the agency clarify crypto security guidelines, to support innovation and to lessen the increasingly tense mood in the crypto space caused by widespread crackdowns led by the SEC.

Congress says they believe crypto is important for many sectors of the United States economy, and that the SEC’s view that all cryptos are securities, besides Bitcoin and Ethereum, is leading to an exodus of crypto and blockchain companies and talent from the United States. Congress is concerned that the United States will fall behind in the crypto and financial technology sectors due to the SEC’s behavior, explicitly stating that the SEC is inhibiting innovation by using law enforcement instead of making the rules better and easier to understand. Congress explicitly demands the SEC clarify guidelines by making them more articulate and improving them.

Currently, the SEC’s definition of a security cryptocurrency is any crypto which is purchased by investors from a centralized organization with the expectations of profits from their investments. Congress believes this classification is too broad since it basically includes all cryptos besides perhaps Bitcoin and Ethereum as security within that definition. Congress is asking the SEC to expand on its definition of crypto securities and to reference the Securities Act and Howey Test in its response. Furthermore, Congress wants the SEC to create easy to understand educational materials, like FAQs and examples, so crypto users aren’t confused.

Congress wants the SEC to create new guidelines to clarify how a crypto can transition from a security to a non-security due to decentralization, which is what happened with Ethereum. There are probably several cryptos launched with initial coin offerings (ICOs) that are sufficiently decentralized to not be considered securities that would still be called securities by the SEC due to the broad definition that is currently in place.

In the letter, Congress gives a shout out to SEC Commissioner Hester Peirce, who has stood up for crypto rights, unlike other SEC commissioners. Some people in the crypto space have labeled her ‘crypto mom’ for her nurturing attitude towards crypto.

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Goodlatte First Member of US Congress to Disclose Crypto Holdings

US Congressman Bob Goodlatte has declared his private Cryptocurrency holdings, becoming the first member of Congress to do so.

Goodlatte, who currently serves as the chair of the House Committee on the Judiciary, has reported that he currently holds a number of cryptocurrencies, namely Bitcoin (BTC), Bitcoin Cash (BCH) and Ethereum (ETH).

Clearly, holding cryptocurrencies in itself is not at all unusual but perhaps a rarer disclosure when made by influential politicians, given the current state of regulation in the US surrounding cryptocurrencies.

The disclosure was filed in on 10 May that congressman Goodlatte owns between USD 15,001 and USD 50,000 worth of BTC, while also holding positions in BCH and ETH valued at between USD 1,001 and USD 15,000 each.

The reason for the disclosure is a result of a Congressional Blockchain Caucus legal advisory that request that all employees of the United States executive branch reveal any crypto holdings within 45 days. The advisory was not simply limited to crypto but all holdings.

Crypto clearly runs through the congressman’s family as his son Bobby Goodlatte Jr has Coinbase investments. Also, Congressman Goodlatte is a member of the Congressional Blockchain Caucus itself. The founder of the group is Jared Polis who requested guidance early this year on crypto disclosure. Analysts are expecting him to be the next politician to disclose crypto assets.

Polis argued in February that, because crypto assets are regarded as commodities by some agencies, Congress should treat them as traditional assets for disclosure purposes. He argued:

“Members of Congress and covered employees are already required to report certain asset holdings over certain amounts, including reporting any commodities holding over USD 1,000, a Member or covered employee should report any virtual currency holding as they would report any other commodity, such as gold.”

Polis is notably pro-crypto, once suggesting that the US dollar be banned and replaced with Bitcoin, and is also one of the first US politicians to accept Bitcoin campaign donations.

 

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New US Trafficking Act Will Investigate Illicit Crypto Use

The Fight Illicit Network and Detect (FIND) Trafficking Act is being introduced by congressman Juan Vargas of California to the United States House of Representatives Committee on Financial Services. If the bill is passed, it would require the Comptroller General of the United States to investigate the illicit use of cryptocurrencies for drug trafficking and sex trafficking in online marketplaces.

No later than one year after the bill is enacted, the Comptroller General would have to submit a report to the Committees on Banking, Housing, Urban Affairs, and Financial Services. This report must include recommendations for legislative and regulatory action that would improve federal government efforts to hinder the use of cryptocurrencies for drug dealing and sex trafficking, as well as how to successfully enforce justice against dark web markets.

This is part of a continuing effort during the presidency of Donald Trump to put an end to sex trafficking. FOSTA-SESTA was passed by the US House of Representatives and made it illegal to post ads for prostitutes online, shutting down popular sections of the websites Backpage and Craigslist.

In general, the US government has been increasing regulation of cryptocurrency but for the most part, has been legalizing and legitimizing its use to the point that big Wall Street firms are beginning to invest in and explore cryptocurrency.

Drug dealing played an essential role in Bitcoin’s initial popularity and evolution, especially on the Silk Road where users could buy drugs and weapons. Silk Road only accepted Bitcoin since Bitcoin was relatively anonymous and could be sent anywhere in the world instantly, and collected BTC 9.5 million of revenue from sales, then worth USD 1.2 billion, before getting shut down by law enforcement.

Now Bitcoin is mostly being used for legal goods, services, and investments as it has expanded into a global currency with a market cap of hundreds of billions of USD. Bitcoin’s image and reputation would stand to improve further if the US government shut down illicit drug dealing and sex trafficking associated with cryptocurrency.

There is probably no way to completely stop drug dealing and sex trafficking with Bitcoin and cryptocurrency though, just like there’s no way to completely stop cash from being used for the same purposes.

 

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