Washington, D.C. – Last night, the House Financial Services Committee considered Majority Whip Emmer’s (MN-06) bipartisan bill with Representative Darren Soto (FL-09), the Blockchain Regulatory Certainty Act. The bill was passed out of the Committee and reported favorably to the House floor during the markup session, a significant step toward passing this legislation through Congress.
“Codifying this guidance from FinCEN cements in statute a well agreed upon interpretation of how money transmitter laws are applied to the decentralized blockchain ecosystem, which will allow the next iteration of the internet to be designed by Americans and with American values,” Emmer said.
Transcript of Remarks:
Thank you, Chairman McHenry. I’m proud to have my nonpartisan bill, the Blockchain Regulatory Certainty Act, included in this markup today. I’ve been working on this legislation for the past four congresses, and I’d like to thank my friend, Darren Soto from Florida, for co-leading this effort with us.
The bill is simple: It codifies longstanding guidance from the Financial Crimes Enforcement Network within Treasury (FinCEN) on how the money transmission framework applies to the decentralized blockchain space.
The money transmission licensing framework in the United States is a state-by-state framework requiring more than 50 state and territorial licenses, as well as federal registration with FinCEN. Of course, money transmission licensing laws are designed to protect consumers from the risk of loss of assets – a risk presented when transmitters, money transmitters, and other intermediaries actually take control of consumer funds.
However, with state regulations varying on what type of blockchain-related entities qualify as money transmitters, major discrepancies in the state-by-state framework create uncertainty for providers who never have custody of customer funds and, in fact, even provide extra layers of protection for the very consumers that money transmitter laws are designed to protect.
To provide a solution, the Blockchain Regulatory Certainty Act codifies existing FinCEN guidance to affirm that non-custodial blockchain developers and service providers (like miners, validators, and wallet providers) that never custody consumer funds do not have to register as a money transmitter. This guidance was published in 2013 under the Obama Administration, it was republished in 2019 under the Trump Administration, and it remains the guidance FinCEN follows today under the Biden Administration.
Codifying this guidance from FinCEN cements in statute a well agreed upon interpretation of how money transmitter laws are applied to the decentralized blockchain ecosystem, which will allow the next iteration of the internet to be designed by Americans, with American values.
The markup today and the markup tomorrow in this Committee are focused on providing regulatory certainty for the digital asset ecosystem as a new, emerging innovation that has the potential to redesign the digital economy and provide the economic boom the United States needs to climb out of our $32 trillion national debt. Guidance is not as concrete as statute. Statute gives certainty. Guidance can change at the political whim of a new administration. Fortunately, that has not been the case with this FinCEN guidance, but we need to give this industry certainty in the form of statutes if we are going to stand a chance in developing the next iteration of the internet and the digital economy so that it reflects our values, American values.
Again, thank you, Chairman McHenry for holding this markup today. Thank you, again, to my friend Darren Soto for his continued nonpartisan collaboration with us on this bill and the other digital asset legislation. I’d also like to recognize Ranking Member Waters and her staff for their open dialogue with our office on this bill in the days prior to this markup. I understand the time constraints haven’t allowed for Committee Democrats to gather feedback from the Treasury, but I appreciate your team’s attention to the bill and I’d like to offer to work with you and your team once this bill passes out of Committee to make alterations you need so that we can continue to move this legislation forward in the nonpartisan fashion it is being offered.
And I yield back the balance of my time.
In 2013, FinCEN issued guidance on how it interprets the Bank Secrecy Act requirements relating to how money transmission should apply to certain businesses in the digital asset space and then republished similar updated guidance in 2019. In following this guidance, FinCEN, to this day (and in fact, since 2013), broadly assesses who controls access to the value (consumer funds) and asserts that anyone who has the ability to initiate transactions with users’ assets themselves qualifies as a money transmitter. The guidance specifically follows that blockchain developers and service providers (miners, validators, wallet providers) that never custody consumer funds are not money transmitters. While this guidance has not changed since 2019, states remain fragmented in their treatment of blockchain entities for money transmission purposes, which only stifles innovation and confuses the marketplace on how to comply with crucial consumer protection requirements.
The Blockchain Regulatory Certainty Act codifies this FinCEN guidance into law.
The text of the Blockchain Regulatory Certainty Act can be found, here.