• Ashley N. Baker

New Congress, New Regulations: A Guide to Virtual Currency Bills

Note: This post is also published on the blog of the Government Blockchain Association, a membership organization for individuals, organizations, and policymakers that are interested in promoting blockchain related solutions to government requirements. It is intended to be a resource for learning about the future of regulation.

With more than a dozen bills introduced in the first three months of 2019, the 116th Congress seems eager to take on cryptocurrency regulation through a wide range of legislative proposals that will impact both virtual currency and blockchain technology. While none of these are sure to pass, a guide to current legislation could still be a useful resource to those in the blockchain and policy communities. This list will be periodically updated in subsequent posts. Additional analysis of specific bills and regulatory proposals will appear separately.

Crime Prevention & Detection

H.R. 502 Fight Illicit Networks and Detect Trafficking Act (“FIND Trafficking Act”)

Purpose: To require the Comptroller General of the United States to carry out a study on how virtual currencies and online marketplaces are used to buy, sell, or facilitate the financing of goods or services associated with sex trafficking or drug trafficking, and for other purposes.

Introduced: January 11, 2019

Sponsor: Rep. Juan Vargas (D-CA)

Co-sponsor(s): Rep. Ann Wagner (R-MO), Rep. Brian Fitzpatrick (R-PA), Rep. Cynthia Axne (D-IA)

Status: On January 28, H.R. 502 was passed by a vote of 412-3 in the House through a motion to suspend the rules and agree to the bill.

Summary: The FIND Trafficking Act, if passed in the Senate, will direct the Government Accountability Office (GAO) to report on the use of virtual currencies and online marketplaces in sex and drug trafficking following a study conducted by the Office of the Comptroller General. The study must evaluate how illicit proceeds are transferred from overseas into the U.S. banking system and the extent to which the immutable and traceable nature of virtual currencies can contribute to the tracking and prosecution of illicit funding.

The Comptroller General must also assess preventative efforts by federal or state agencies to impede the transfer of funds to, from, or within the United States that are meant to buy, sell, or finance sex or drug trafficking. A report summarizing the results of the study -- along with recommendations for legislative or regulatory action -- must be submitted by the Comptroller General to the House Committee on Banking, Housing, and Urban Affairs within one year of enactment.

S. 410 Fight Illicit Networks and Detect Trafficking Act (“FIND Trafficking Act”) (H.R. 502 Companion Bill)

Purpose: See above.

Introduced: February 7, 2019

Sponsor: Sen. Catherine Cortez Masto (D-NV)

Co-Sponsor(s): Sen. Pat Toomey (R-PA)

Status: Referred to the Committee on Banking, Housing, and Urban Affairs.

Summary: See above.

H.R. 1387 Criminal Organizations’ Narcotics, Finances, Resources, Operations, and Networks Targeting (CONFRONT) Act

Purpose: To require the President to develop a national strategy to combat the financial networks of transnational organized criminals, and for other purposes.

Introduced: February 27, 19

Sponsor: Rep. David Kustoff (R-TN)

Co-sponsor(s): Rep. Bill Foster (D-IL), Rep. Josh Gottheimer (D-NJ)

Status: Referred to the House Committee on Financial Services.

Summary: This bill would create a national strategy to combat the financial networks of transnational organized criminals. The strategy must include an assessment of methods by which trans­na­tion­al organized crime groups launder illicit proceeds, including money laundering using real estate and other tangible goods such as art and antiquities, trade-based money laundering, bulk-cash smuggling, exploitation of shell companies, and misuse of digital currencies and other cyber technologies, as well as an assessment of the risk to the financial system of the United States of such methods.

National Security & Terrorism

H.R. 1414 FinCEN Improvement Act of 2019

Purpose: To amend the duties of the Financial Crimes Enforcement Network (FinCEN) to ensure FinCEN works with Tribal law enforcement agencies, protects against all forms of terrorism, and focuses on virtual currencies.

Introduced: February 27, 2019

Sponsor: Rep. Jennifer Wexton (D-VA)

Co-sponsor(s): Rep. Denver Riggleman (R-VA), Rep. Van Taylor (R-TX)

Status: On March 11, H.R. 1414 was passed by voice vote in the House through a motion to suspend the rules and agree to the bill.

Summary: If passed in the Senate, this bill will extend the authority of FinCEN by amending 31 U.S. Code § 310 by striking "anti-terrorism and anti-money laundering initiatives, and similar efforts’’ and inserting ‘‘anti-terrorism and anti-money laundering initiatives, including matters involving emerging technologies or value that substitutes for currency, and similar efforts.’’ The findings behind this change are that: “Although the use and trading of virtual currencies are legal practices, some terrorists and criminals, including international criminal organizations, seek to exploit vulnerabilities in the global financial system and are increasingly using emerging payment methods such as virtual currencies to move illicit funds.”

S. 582 FinCEN Improvement Act of 2019 (H.R. 1414 Companion Bill)

Purpose: See above.

Introduced: February 27, 2019

Sponsor: Sen. Catherine Cortez Masto (D-NV)

Co-sponsor(s): Sen. Bill Cassidy (R-LA), Sen. Kyrsten Sinema (D-AZ), Sen. Jerry Moran (R-KS), Sen. Elizabeth Warren (D-MA)

Status: Referred to the Committee on Banking, Housing, and Urban Affairs.

Summary: See above.

H.R. 428 Homeland Security Assessment of Terrorists’ Use of Virtual Currencies Act

Purpose: To direct the Under Secretary of Homeland Security for Intelligence and Analysis to develop and disseminate a threat assessment regarding terrorist use of virtual currency.