New US Legislation Implemented to Enhance Supervision of Cryptocurrency Transactions
US lawmakers introduced a new bill, the “Off-Chain Digital Commodity Transaction Reporting Act,” to combat money laundering and increase supervision of digital currency transactions.
According to representative, Don Beyer, who introduced this new digital currency law, it will prevent the virtual asset industry from financial crimes related to money laundering and terrorist financing, including increased digital currency regulations and disclosure. This latest regulation urges all virtual assets transactions should be reported by the crypto service providers to the US Commodity Futures Trading Commission (CFTC).
The initial goal of this law is to protect crypto holders against lawsuits, fraud, and manipulation that emerge from off-chain and extra-blockchain activities. Crypto-off-chain and on-chain transactions are constantly recorded in the blockchain, making monitoring online virtual assets transactions difficult. Currently, most crypto exchange platforms use off-chain transactions to streamline processes but do not keep records in the public ledger.
Beyer forced the cryptocurrency transaction platforms to keep internal records across all private businesses to combat this issue or protect investors and consumers. The latest crypto transaction regulation requires that, within 24 hours of an off-chain transaction implementation, the crypto service provider notify a trading database that has been authorised by the CFTC.
This legislation is in keeping with other legislators in the current era to combat money laundering in the US. Senator Elizabeth Warren first proposed the Digital Asset Anti-money Laundering Act (AML) in July 2023 and reintroduced it in September to prevent digital currency from being used illegally. This legislation will be approved by the Bank Secrecy Act (BSA) legislations to strengthen restrictions on noncustodial digital wallets and broaden the powers granted by the BSA in order to prevent the illicit use of virtual currency.
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