In a major development for the crypto sector, U.S. Representative Don Beyer unveiled the “Off-Chain Digital Commodity Transaction Reporting Act” on September 28. This legislation is designed to bolster transparency and safeguard cryptocurrency investors by requiring rigorous reporting of off-chain transactions to a government repository regulated by the CFTC.
The legislation addresses a critical concern surrounding transactions occurring beyond the confines of the blockchain network, commonly referred to as off-chain transactions. Unlike on-chain counterparts, these transactions bypass instant blockchain logging and are routed through secondary layers, posing significant tracking challenges.
Highlighting the urgency, Representative Beyer emphasized the inconsistency in internal record-keeping practices among private entities. Such disparities leave investors and consumers susceptible to potential fraud and manipulation, underscoring the necessity for this proposed bill.
“This bill is a common-sense measure to restore some transparency and confidence to the digital asset market.” Beyer asserted.
US Bill Urges 24-Hour Off-Chain Crypto Reporting
As per the bill’s stipulations, crypto service providers must promptly disclose all off-chain transactions within a rigorous 24-hour timeframe to a trade repository registered with the Commodity Futures Trading Commission (CFTC). This structural framework aligns closely with the well-established reporting standards that oversee a diverse spectrum of securities and swaps transactions in the crypto space.
The move comes as part of a broader concerted effort by U.S. lawmakers to tighten regulatory reins on the burgeoning cryptocurrency sphere. In September, nine U.S. senators rallied behind Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act, demonstrating a collective push for a comprehensive regulatory framework. Originally introduced in July 2023, the legislation aims to crack down on noncustodial digital wallets and extend Bank Secrecy Act obligations to combat the illicit use of digital currencies.
As the cryptocurrency landscape evolves, the Off-Chain Digital Commodity Transaction Reporting Act is a pivotal step toward fortifying the market’s integrity and fostering investor confidence in developing transaction methodologies.
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