In a recent move, U.S. Rep. Don Beyer, a Democrat representing the 8th District of Virginia, put forward a bill aimed at ensuring a transparent management of off-chain digital commodity transactions. The Off-Chain Digital Commodity Transaction Reporting Act, introduced on Sept. 27, calls for crypto trading platforms to report all transactions to repositories approved by the Commodity Futures Trading Commission (CFTC).
Generally speaking, off-chain transactions are not documented on the blockchain, leaving behind no network trace of their specific financial data. This absence of record, Beyer posits, could leave these transactions more susceptible to hacking and data breaches. As he points out, “thousands of transactions occur ‘off-chain’ each day and are unrecorded on the publicly viewable blockchain,” due to the rise of trading platforms and the quest for faster transactions and cost reduction.
Rep. Beyer believes his bill to be a sensible approach towards addressing privacy concerns and reinstating “transparency and confidence” within the crypto market. Owing to the disparity in internal record keeping among private entities involved in the crypto market, investors and consumers could find themselves at risk of fraud and manipulation. By mandating that off-chain transaction data be pushed into repositories accessible by regulators, Beyer believes the crypto market could avert an occurrence akin to the FTX collapse.
Drilling down into the specifics of the bill, it insists that details of each digital asset swap, whether cleared or uncleared, be reported to a registered swap data repository. Furthermore, the sale details of digital commodities should also be reported to the crypto repository for all transactions.
In effect, trading platforms would have to report every transaction immediately upon completion. This requirement aligns with Beyer’s vision to have all off-chain digital asset transactions reported within 24 hours to a CFTC-registered trade repository, much like the requirements currently held for nearly all securities and swaps transactions.
Preceding this, in 2021, Rep. Beyer tabled the Digital Asset Market Structure and Investor Protection Act with a focus on boosting consumer protection and endorsing innovation. Whether Rep. Beyer’s latest move will steer the crypto market towards a more regulated, transparent system is a discussion crypto enthusiasts will surely follow keenly.
Source: Cryptonews
