The United States Representative, Don Beyer, introduced a new bill, the ‘Off-Chain Digital Commodity Transaction Reporting Act’, intending to safeguard participants in the market for digital assets.
According to the legislation introduced on September 28, trading platforms must submit a report of each transaction to a repository registered with the Commodity Futures Trading Commission (CFTC).
The blockchain technology that supports the digital asset market gives market participants security, traceability, and transparency as all transactions are made public and verified by a decentralized network that is independent of any one actor.
However, thousands of transactions take place “off-chain” every day and are not visible on the publicly accessible blockchain due to the emergence of trading platforms and a desire to speed up and reduce transaction costs. Many platforms maintain internal private ledgers that track transactions, but these records can be of varying quality.
The new regulations are designed to safeguard cryptocurrency investors from disputes, manipulation, or fraud that may result from transactions that happen off-chain, or outside of the blockchain network.
“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,” said Representative Beyer in the statement.
Following the legislation, all off-chain transactions involving digital assets would have to be reported to a CFTC-registered trade repository within 24 hours, just like they are required to do for almost all securities and swaps transactions.