U.S. Lawmakers Pondering “Crypto-Currency Act of 2020”


U.S. lawmakers are reportedly discussing a new bill entitled “Crypto-Currency Act of 2020” which stated purpose is to:

“…clarify which federal agencies regulate digital assets, to require those agencies to notify the public of any federal licences, certifications, or registrations required to create or trade in such assets, and for other purposes.”

“You should be able to tell your examiner, and/or your regulator like FinCEN, how you mitigate risks…identify potentially suspicious activity and comply with reporting and recordkeeping requirements — including the Funds Travel Rule. You can count on being asked about this during an examination,” stated Kenneth A. Blanco, Director of FinCEN.

Bill highlights:

  1. Assigns a definition of ‘Federal Digital Asset Regulator’ or ‘Federal Crypto Regulator’ to three agencies – the Commodity Futures Trading Commission (CTFC), the Securities and Exchange Commission (SEC), and the Financial Crimes Enforcement Network (FinCEN).
  2. Splits digital assets into three different categories: crypto-currencies, crypto-commodities, and crypto-securities.
  3. The Federal Crypto Regulator is assigned one of the categories and is defined as the sole Government agency with the authority to regulate:
      1. CFTC – crypto-commodities;
      2. SEC – crypto-securities;
      3. FinCEN – crypto-currencies.
  4. Each Federal Crypto Regulator is required to make available to the public and keep current a list of all Federal licenses, certifications, or registrations required to create or trade in digital assets.
  5. Requires the Secretary of the Treasury, through FinCEN, to establish rules similar to financial institutions on the ability to trace cryptocurrency transactions.

A breakdown of how each term is defined in the bill is listed below:


In the description of a crypto-commodity, the definition is economic goods or services that a) has full or substantial fungibility, b) the markets treat with no regard for who produced the goods or services, and c) rests on a blockchain or decentralized cryptographic ledger.


Crypto-currency is defined as representations of United States currency or synthetic derivatives resting on a blockchain or decentralized cryptographic ledger. The types that are included in this definition are:

  1. such representations or synthetic derivatives that are reserve-backed digital assets that are fully collateralized in a correspondent banking account, such as stablecoins.
  2. synthetic derivatives that are determined by decentralized oracles or smart contracts; and collateralized by crypto-commodities, other crypto-currencies, or crypto-securities.


Crypto-security means all debt, equity, and derivative instruments that rest on a blockchain or decentralized cryptographic ledger, with an exception. For a synthetic derivative that is operated and registered with the Department of the Treasury as a money services business and is operated in compliance with all Bank Secrecy Act and all other Federal anti-money launderings, anti-terrorism, and screening requirements of the Office of Foreign Assets Control and the Financial Crimes Enforcement Network.

Decentralized Oracle

A ‘decentralized oracle’ means a service that sends and verifies real-world data from external sources outside of a blockchain and submits such information to smart contracts that rest on the blockchain, thus triggering the execution of predefined functions of the smart contract.

Reserve-Backed Stablecoin

A reserve-backed stablecoin is defined as a representation of currency issued by the United States or a foreign government that rests on a blockchain or decentralized cryptographic ledger and is fully backed by such currency on a one-to-one basis and fully collateralized in a correspondent banking account.

Synthetic Stablecoin

The term ‘synthetic stablecoin’ means a digital asset, other than a reserve-backed stablecoin, that is stabilized against the value of a currency or other asset, and rests on a blockchain or decentralized cryptographic ledger.

The Chosen Federal Crypto Regulators: SEC, CFTC, and FinCEN

As three regulators are defined as the new digital asset regulators in the Federal government, this is not the first sign that there may be a common role between them for this new asset class in a similar fashion to how the Federal Reserve, FDIC, and the OCC coordinate their efforts in the regulation of the nation’s largest financial institutions. On October 11, the leaders of each of these regulators wrote a joint statement on activities involving digital assets with respect to their obligations under BSA.

Leaders of CFTC, FinCEN, and SEC Issue Joint Statement on Activities Involving Digital Assets

FinCEN To Establish Rules On Tracing Of Transactions

The bill would require the Secretary of the Treasury, acting through FinCEN, shall issue rules to require each crypto-currency (including synthetic stablecoins) to allow for the tracing of transactions in the crypto-currency and persons engaging in such transactions in a manner similar to that required of financial institutions with respect to currency transactions.

In October, the CFTC, FinCEN, and SEC worked together to issue a joint statement on activities involving digital assets. This bill, were it to be passed, would further reinforce the way these agencies would co-exist as the three ‘Federal Crypto Regulators’ responsible for regulating digital assets.

While many businesses may already consider the SEC and CFTC traditional regulators of these new digital financial instruments, FinCEN – a department within the U.S. Treasury – is generally considered more of a law enforcement agency than a traditional financial services regulator. FinCEN Director Kenneth Blanco recently noted at a Blockchain Symposium in New York on November 15, 2019, that for FinCEN exams,

Below is a discussion draft of the bill and by denoting the year 2020, is likely something that, after updates by input from the industry, we may see introduced in the New Year.

Crypto-Currency Act of 2020 (Draft Discussion)

[pdf-embedder url=”https://www.the-blockchain.com/wp-content/uploads/2020/01/bill-digitalassets-usa.pdf”]

Click here for full bill