U.S. Rep. Don Beyer, a Democrat serving the 8th District of Virginia, is pushing a bill that would establish centrally-accessible repositories for off-chain cryptocurrency transaction data.
The bill, dated Sept. 27 – the Off-Chain Digital Commodity Transaction Reporting Act – urges crypto trading platforms to “report all transactions to a repository registered with the Commodity Futures Trading Commission (CFTC).”
Usually, off-chain transactions aren’t written on the blockchain, leaving no network record of the transaction’s financial details. As a result, off-chain solutions might be more vulnerable to hacking and data breaches depending on the specific implementation.
“With the emergence of trading platforms and a desire to increase transaction times and lower costs, thousands of transactions occur “off-chain” each day and are unrecorded on the publicly viewable blockchain,” the legislator said.
The Congressman’s bill is a “common-sense measure” to resolve privacy issues and “restore some transparency and confidence” among users and across the crypto market, said Beyer in a separate statement.
“Unfortunately, internal record keeping among these private entities can vary wildly, and this can leave investors and consumers vulnerable to fraud and manipulation. This bill is a common-sense measure to restore some transparency and confidence to the digital asset market.”
Beyer hopes that pushing off-chain transaction data into repositories where regulators can see would help stop FTX-like collapse.
What Does the Bill Say?
Each digital asset swap, whether cleared or uncleared, shall be reported to a registered swap data repository, the detailed bill noted. Additionally, sales of digital commodities should be stated to the crypto repository for transactions.
Trading platforms are required to report every transaction as soon as the transaction is executed, it added.
“This legislation would require that all off-chain digital asset transactions be reported within 24 hours to a CFTC-registered trade repository, similar to the requirements for virtually all securities and swaps transactions,” Beyer wrote.
In 2021, Beyer introduced the Digital Asset Market Structure and Investor Protection Act, to protect consumers and promote innovation.
