A new United States bill, introduced by Democrat Representative Don Beyer, is making waves in the crypto community for its forward approach to regulating the murky waters of off-chain transactions. The “Off-Chain Digital Commodity Transaction Reporting Act” requires cryptocurrency service providers to report all off-chain transactions to an authority repository registered with the Commodity Futures Trading Commission (CFTC).
This move seeks to quell any potential disputes, manipulation, or fraud that could arise from these off-chain transactions, which are not immediately logged on a blockchain, but processed through secondary layers. It’s no secret that since the dawn of trading platforms wishing to increase transaction speed and decrease costs, many transactions have started to occur off-chain, causing difficulties in tracking their full trajectories.
The internal record-keeping among private entities participating in off-chain transactions undoubtedly varies, creating an environment laced with the potential for fraud and manipulation. This bill, if put into law, could restore some level of transparency and confidence in the digital asset marketplace—an echo to the sentiments of the representative who introduced it.
According to this bill’s clause, crypto service providers would be required to report all off-chain transactions to a CFTC-registered trade repository within 24 hours. The reported model is supposed to be on par with the requirements for most securities and swaps transactions.
In parallel, U.S. legislators have been keeping a close eye on cryptocurrency regulations. In a recent move, nine U.S. Senators were in support of Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act. This pending legislation aims to crack down on noncustodial digital wallets and extend Bank Secrecy Act responsibilities to include combating the illicit use of digital money.
On the other side of the coin, while regulating off-chain transactions appears beneficial for mitigating potential fraudulent activities, it raises concerns surrounding privacy infringement and increased bureaucratic overhead that could stifle the thriving global blockchain revolution.
Thus, while this legislative approach is rooted in good faith to uphold transparency and reduce fraud, it remains to be seen whether it strikes the right balance between ensuring market safety without choking the innovation and privacy benefits that cryptocurrencies inherently offer.
Source: Cointelegraph
