To bolster transparency and protect cryptocurrency investors, U.S. Representative Don Beyer introduced the “Off-Chain Digital Commodity Transaction Reporting Act.”
The bill, proposed on September 28th, seeks to mandate cryptocurrency service providers to report all blockchain transactions to a government-registered repository overseen by the Commodity Futures Trading Commission (CFTC).
Over time, the US has played a role in sanctioning several crypto firms that have crashed, such as FTX, Celsius, Terra, and others. While top crypto personalities such as the CEO of Coinbase have stated clearly that the SEC has refused to create clear guidelines for regulating the industry, legislative steps from the Senate and House of Representatives have consistently been taken to see a controlled space.
Don notes that the core objective of this legislation is to safeguard cryptocurrency investors against possible disputes, manipulation, or fraud stemming from off-chain transactions.
Unlike on-chain transactions, which are promptly logged on the blockchain, off-chain cryptocurrency transactions occur through secondary layers, making them more difficult to track.
There are new technologies that are created to facilitate crypto transactions offline, enhance processing speed, and boost the number of transactions per unit of time.
A typical example is the roll-up technology that’s used by protocols such as Optimism, StarkNet, zKSync, Polygon Zero, and the Mina protocol.
These transactions are expected to be finalized on-chain. However, concerns are rising that not all of these transactions are duly recorded.
“Unfortunately, internal record keeping among these private entities can vary wildly, and this can leave investors and consumers vulnerable to fraud and manipulation,” Don said.
“This bill is a common-sense measure to restore transparency and confidence to the digital asset market.”
The introduction of this bill comes as U.S. lawmakers intensify their focus on cryptocurrency regulations.