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U.S. Rep. Don Beyers, a Democrat, wants to push off-chain crypto transaction data into repositories where regulators can see it, potentially heading off a future FTX.
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A Democratic crypto bill at this stage may have a hard time catching up with the leading House legislation from majority Republicans, and the Senate may be even less hospitable.
It would be hard for a big exchange to repeat an FTX collapse if the firm’s internal flow of crypto assets was also reported to an outside repository that U.S. regulators could see. That’s the idea behind new legislation from Rep. Don Beyer (D-Va.) that would force exchanges to share the movement of digital assets now only recorded on their own ledgers.
A lot of the day-to-day transactions from crypto investors happen only internally at the handful of major exchanges, recorded by the companies rather than on public blockchains, but this bill would call for regulated repositories to gather the data for each trade of a “digital commodity, digital asset, or digital collectible” for use by agencies including the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
Beyer has been in talks with Republicans in the hope he could merge his idea for crypto data repositories into their market-structure bill that’s already in motion, according to a person familiar with the discussions. His office has also reached out to the Senate, which is so far looking like a brick wall for allowing major crypto legislation – this or anything else – in this session.
“As consumers increasingly turn to large digital asset trading platforms to conduct their business, thousands of transactions each day are conducted off the publicly verifiable blockchain,” Beyer said in a Thursday statement. “Unfortunately, internal record keeping among these private entities can vary wildly, and this can leave investors and consumers vulnerable to fraud and manipulation.”
Crypto data repositories would mirror what was done in the Dodd-Frank Act of 2010 to swaps trading information after that sector played a central role in the biggest financial disaster in a generation.
Beyer is the top House Democrat on the Joint Economic Committee, but he’s not sitting on the House Financial Services or Agriculture committees that would be likely to shepherd crypto legislation. The financial panel, chaired by Rep. Patrick McHenry (R-N.C.) has made more crypto progress than in past years, already clearing a number of industry-related bills through his committee, including the market-structure bill that could be a home for Beyer’s idea if Republicans were receptive.
Republicans control the House and have their own crypto agenda they’re working through, and they’ve shown a willingness to press forward on bills without wide bipartisan support. The bill from Beyer – who was among the earliest lawmakers to attempt comprehensive crypto legislation with a bill two years ago that failed to advance – represents a complex and costly action that would shine a light on digital assets platforms’ inner workings, so it’s uncertain whether crypto-friendly Republicans will look favorably on it.
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