Home Community Insights The United States Blockchain Regulatory Certainty Act (BRCA) Passed by Financial Committee

The United States Blockchain Regulatory Certainty Act (BRCA) Passed by Financial Committee

The United States Blockchain Regulatory Certainty Act (BRCA) Passed by Financial Committee

The Blockchain Regulatory Certainty Act, a bill that aims to provide clarity and legal protection for blockchain service providers, has passed in the House Financial Services Committee with bipartisan support. The bill, introduced by Rep. Tom Emmer (R-MN), would exempt blockchain developers and intermediaries from certain state money transmitter laws and licensing requirements, as long as they do not have custody of consumer funds.

The bill is part of a broader effort by lawmakers and industry stakeholders to foster innovation and growth in the blockchain sector, while addressing the regulatory challenges and uncertainties that have hampered its development. According to Rep. Emmer, the bill would “create an environment for innovation to flourish” and “ensure that entrepreneurs don’t have to worry about outdated laws or regulations that don’t fit this new technology.”

The bill has received endorsements from several prominent blockchain organizations, such as the Chamber of Digital Commerce, the Blockchain Association, and Coin Center. These groups have praised the bill for recognizing the distinction between custodial and non-custodial blockchain services, and for providing a clear and consistent framework for the industry.

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The bill now moves to the full House of Representatives for consideration, where it faces an uncertain fate. While the bill has garnered bipartisan support in the committee, it may face opposition from some lawmakers who are concerned about the potential risks and abuses of blockchain technology, such as money laundering, terrorism financing, and consumer protection. The bill may also need to be reconciled with other competing or complementary bills that address different aspects of blockchain regulation, such as the Token Taxonomy Act, the Blockchain Innovation Act, and the Eliminate Barriers to Innovation Act.

The Blockchain Regulatory Certainty Act is a significant step forward for the blockchain industry in the US, as it seeks to provide a more favorable and predictable legal environment for innovation and adoption. However, it is not a silver bullet that will solve all the regulatory issues that plague the sector. The industry still needs to work with regulators and policymakers at both the federal and state levels to ensure that blockchain technology is used in a responsible and beneficial manner for all stakeholders.

The blockchain industry is growing rapidly, with new applications and use cases emerging every day. However, the regulatory landscape for blockchain-based businesses is still unclear and inconsistent across different jurisdictions. This creates uncertainty and risk for entrepreneurs, investors, and consumers who want to participate in this innovative sector.

To address this challenge, a bipartisan group of lawmakers in the U.S. Congress has introduced the Blockchain Regulatory Certainty Act (BRCA), a bill that aims to provide clarity and protection for blockchain service providers who do not take custody of digital assets. The BRCA would create a safe harbor for these non-custodial entities, exempting them from certain state licensing and registration requirements that are designed for traditional financial intermediaries.

The BRCA defines a blockchain service provider as “any person or entity that provides or facilitates the provision of a service using distributed ledger technology, including a smart contract or decentralized application”. The bill also specifies that a blockchain service provider does not include “a person or entity that has control over digital assets on behalf of another person or entity”.

The BRCA recognizes that non-custodial blockchain service providers do not pose the same risks as custodial ones, such as theft, fraud, or money laundering. Therefore, they should not be subject to the same regulatory burdens that apply to banks, money transmitters, or broker-dealers. The BRCA would allow these entities to operate across state lines without having to obtain multiple licenses or comply with conflicting rules.

The BRCA would also promote innovation and competition in the blockchain industry, by creating a level playing field for different types of service providers. It would encourage the development of decentralized solutions that empower users to control their own digital assets, rather than relying on third-party intermediaries. Moreover, it would foster collaboration and coordination among federal and state regulators, as well as industry stakeholders, to establish clear and consistent standards for the blockchain sector.

The BRCA is an important step forward for the blockchain industry in the U.S., as it would provide legal certainty and regulatory relief for many entrepreneurs and innovators who are building the future of finance, commerce, and society on distributed ledger technology. The bill has received support from various industry associations and advocacy groups, such as the Chamber of Digital Commerce, the Blockchain Association, and Coin Center. However, it still faces a long and uncertain legislative process before it can become law.

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