Congress Begins to Take a Serious Interest in Cryptocurrency

The United States Congress is taking a fast growing interest in cryptocurrency and blockchain technology. In the past year alone, Congress has:

  • Formed the Congressional Blockchain Caucus (“CBC”) to help the development of blockchain technology and  leverage the benefits of blockchain for the American people;
  • Introduced a bill to encourage every-day cryptocurrency transactions;
  • Published a detailed economic report in support of blockchain technology;
  • Passed two laws and introduced numerous bills regarding the use of blockchain and cryptocurrency in cybersecurity and illicit financial activities.

Congressional Blockchain Caucus

The most recent 114th Congress founded the bi-partisan Congressional Blockchain Caucus with a foundational belief in the future and advancement of blockchain technology. The CBC wishes to guide Congress to play a hands-off regulatory approach in order to encourage natural technological development of blockchain. The group is interested in blockchain’s potential to significantly improve identity management, asset tracking and ownership, healthcare records management, intellectual property rights, and much more. The CBC’s main focus is on data ownership, healthcare, and government applications of blockchain technology. Congressmen David Schweikert [R-AZ6] and Jared Polis [D-CO2] are co-chairs of the CBC. Fourteen other Congressional CBC members and are listed on the CBC website.

Financial Transactions

On September 7, 2017 Schweikert and Polis also introduced Congressional bill H.R. 3708. The bill aims to amend the Internal Revenue Code of 1986 to allow cryptocurrency transactions under $600 to be tax-free. Currently, cryptocurrency transactions in the U.S. are treated as taxable income which makes it expensive and impractical for people to use cryptocurrencies for every-day transactions such as buying coffee, paying for an Uber ride, or paying a friend back for concert tickets.

2018 Joint Economic Report Supports Blockchain Technology

Congress also published a Chapter on blockchain technology in its 2018 Joint Economic Report titled, “Chapter 9: Building a Secure Future, One Blockchain at a Time.” The report encouraged Congressional support for blockchain technology. It covers topics such as the cryptocurrency economy, blockchain technology, regulatory challenges, and blockchain’s uses in cybersecurity, critical infrastructure, digital infrastructure, medical records, and supply chain management.

Cybersecurity and Illicit Financial Activity

As of now, there are two laws referencing the topic of blockchain technology and cryptocurrency. Both laws focus on cybersecurity and illicit financial activity. There are currently twelve more bills circulating through Congress that reference blockchain technology, digital currency, and cryptocurrency in relation to cybersecurity and illicit financial activity.

The Countering America’s Adversaries Through Sanctions Act (“CAATSA”) was signed into law on August 2, 2017. CAATSA, in part, tasks the President to develop a comprehensive national strategy to prevent illicit financial activities within the U.S. financial system. Section 262(8) requires discussion, data, and analysis of cryptocurrencies used for illicit financial trends.

The National Defense Authorization Act for Fiscal Year 2018 (“NDAA”) was introduced on June 7, 2017 and signed into law on December 12, 2017. Section 1239A of the NDAA tasks the

Secretary of Defense and Secretary of State to develop a strategy to counter the threat of malign influence by the Russian Federation. Part of the strategy will counter the potential coercive use of cryptocurrency by the Russian government.

Section 1645 of the NDAA tasks the Secretary of Defense and other appropriate federal departments and agencies to provide Congress a briefing on the cyber applications of blockchain technology by June 10, 2018 (180 days from enactment). The briefing will be provided to intelligence, homeland security, and financial committees of Congress. It will be unclassified, but may include a classified supplement.

The blockchain briefing will include:

1) A description of potential offensive and defensive cyber applications of blockchain technology and other distributed ledger technologies (“DLT”);

2) An assessment of efforts by foreign powers, extremist organizations, and criminal networks to use blockchain and DLT;

3) An assessment of the use or planned use of blockchain and DLT by the federal government and critical infrastructure networks; and

4) An assessment of the vulnerabilities of critical infrastructure networks to cyberattacks.

Congress is quickly learning of the benefits of blockchain technology, and is more interested now than ever to harness its power. The interest and support of U.S. Congress is a positive sign for the future of blockchain and cryptocurrency.