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A state panel suggested that New Hampshire get rid of the present “gray area” where bitcoin businesses operate.
If the legislature implements the recommendations provided by a panel created by Governor Chris Sununu, New Hampshire is poised to become a national leader in cryptocurrencies. The suggestions would create a legal framework for blockchain and cryptocurrency businesses in the state, giving entrepreneurs and regulators clarity and certainty while avoiding the onerous and largely pointless special rules that federal regulators and members of Congress want to impose on the sector. Consumers, depositors, and investors would all be safeguarded by the new regulations.
In the United States, blockchain enterprises now operate in legal limbo. Congress hasn’t given the regulatory agencies much direction, which has led to uncertainty and made it challenging to maintain compliance. Due to this, businesses can make conflicting decisions and incur unneeded expenditures. The Securities and Exchange Commission and the Commodity Futures Trading Commission are both in charge of overseeing the firms.
While these organizations control many things, they each take a distinct approach, and it’s unclear which organization has primacy. Many cryptocurrency exchanges and companies have relocated their activities and corporate domiciles outside of the United States to nations with less regulation as a result of the uncertainty. Bermuda, the Bahamas, Antigua & Barbuda, and Malta are popular offshore sites.
According to Brian Armstrong, CEO of Coinbase, 95% of trade takes place abroad due to regulatory uncertainties. Punishing American businesses, he said, “makes no sense.” While Fidelity Investments had to launch an exchange-traded Bitcoin fund in Canada in 2021, Circle shifted its exchange to Bermuda in 2019. Offshoring, according to Perianne Boring, president of the Digital Chamber of Congress, is partly a result of ambiguity since businesses aren’t ready to operate in a murky area with the threat of punishment hanging over their heads.
By establishing guidelines for how digital assets should be handled by regulators—as securities, commodities, or currencies—New Hampshire’s framework would eliminate any room for ambiguity and make sure they abide by anti-money laundering (AML) and fraud standards. New firms may profit from the new laws because they may draw more risk-averse investors, even though regulators will have their job cut out for them trying to entice cryptocurrency enterprises away from the Caribbean.
The sector, which is still expanding, suffers from uncertainty and confusion as well. The harsh regulations that Congressmen and government agencies want to impose might be worse. Not simply people trading Dogecoin or images of monkeys, they will destroy a sector of the economy that has significant economic repercussions. For instance, some businesses are tokenizing real estate using blockchain ledgers to assist individuals in becoming homeowners without the significant down payment and high monthly mortgage payments. As the U.S. dollar is a worldwide reserve currency and our financial institutions are well-regulated and have access to a lot of cash, suffocating the blockchain sector in its infancy would ultimately undermine American interests. Our soft power might erode as cryptocurrency gains popularity and attracts more attention from foreign governments due to a local industry that is in decline.
Much of the uncertainty is caused, in part, by mistrust about cryptocurrencies. The Silk Road bazaar and FTX, two high-profile examples that led to criminal indictments, have contributed to the misconception that bitcoin is only utilized for “dark web” operations like Ponzi schemes and other illicit activity. Businesses that trade in it thus require greater regulation and control than banks and other companies. However, as the panel noted, traditional currencies and businesses are actually more frequently used in financial crimes. (Wells Fargo has made payments totaling more than $7 billion since 2016 in penalties and settlements resulting from criminal activities.)
The panel presented three primary proposals in order to provide blockchain-based firms a solid legal foundation: Decentralized autonomous organizations (DAOs) should be given limited liability protection, a “blockchain dispute docket” should be established in the court system, and legislative committees should be asked to update pertinent legal codes like the Uniform Commercial Code, the state’s securities law, and state banking laws.
Its dedication to privacy and private property is a further issue that sets New Hampshire apart from federal regulators who are sceptical of the state’s government. The committee pointed out that the mere potential that cryptocurrency may be used to fund crime or terrorism led to the Financial Crimes Enforcement Network’s proposed guidelines requiring financial institutions to record and verify the names of anybody participating in cryptocurrency transactions. In addition to being a ridiculous condition that does not apply to other transactions, this one alone exposes a flaw that hackers may exploit to gain access to a sizable database of personal data.
The commission’s recommendation to subject centralized organizations to the same [Bank Secrecy Act] BSA/AML rules as financial institutions that provide services to customers with cash is correct: “As financial institutions or money service businesses offer platforms to provide Crypto-asset services to clients that own Crypto assets… Before the BSA/AML regime… places more restrictions on crypto service providers, there should be an unusually high level of evidence.”
The work of the group is endorsed by Tron DAO policy head and New Hampshire cryptocurrency champion Andrew Hemingway. He said to me in an email, The ‘live free or die’ ethos is clear in the commission’s viewpoints and suggestions. This attitude fits well with the ethos of cryptocurrencies, too.
Although it is a serious offense, money laundering is not exclusive to cryptocurrencies. Law enforcement officials have stated that due to the openness of the Blockchain, stopping it is made simpler with cryptocurrency. If New Hampshire follows the commission’s recommendations, it will lead the way in the digital asset market and act as a model for lawmakers and federal agencies on how to conduct themselves.
