On December 6th, 2018 U.S. Representative Darren Soto (D-FL), a member of the Congressional Blockchain Caucus, and Ted Budd (R-NC) released two new bills aimed at researching and cleaning up the virtual currency markets.

The new legislation requires reports to be created within one year of passing that research the risks of cryptocurrency market manipulation and mitigation strategies, including proposing new legislation.

Of particular note is the aim to offer crytocurrency exchanges an optional federal framework for compliance that would supersede state requirements.

Virtual Currency Consumer Protection Act of 2018

The first, “A BILL To promote fair and transparent virtual currency markets by examining the potential for price manipulation” is to be cited as the “Virtual Currency Consumer Protection Act of 2018.”

This act is an exploratory one, requiring the creation of a report within one year of being passed that documents:

methods of virtual currency market manipulation

which virtual currencies are more likely to be manipulated than others

effects/harm to consumers if price manipulation occurs

the extent to which federal agencies can monitor/regulate virtual currency markets under existing law

any recommended changes to the laws to better enable consume protection from market manipulations

U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018

The second, “A BILL To promote the United States competitiveness in the evolving global virtual currency marketplace” is to be cited as “U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018.”

It too seeks the creation of a report, within one year of the act passing, with a focus on:

current state of regulations in virtual currency markets

benefits of blockchain technology

recommendations for legislative changes to promote competitiveness, encourage growth and adoption of blockchain technology, clarify those that classify as commodities, provide new, optional regulatory structure for exchanges, cost analysis of this new legislative and enforcement infrastructure

Obviously the most important part in this act is the outline of the regulatory framework for cryptocurrency exchanges, which includes Federal licensure, market supervision, consumer protections, and preemption of State laws regarding participation in exchanges.

The latter sentence being incredibly important: a Federal regulatory opt-in for exchanges could mean bypassing the tangled web of State to State regulatory compliance issues that keeps some exchanges (IDEX in New York, 2018, for instance) from being able to service customers.

Defining “Virtual Currency”

Both laws define “virtual currency” thusly:

a digital representation of value that does not have legal tender status and that functions as a medium of exchange, a unit of account, or a store of value.

Summary