A member of the Texas House of Representative has recently introduced a bill to ban the anonymous use of cryptocurrencies in the state.
Phil Stephenson, a Republican member of the House, has proposed enforcing the identification of individuals sending and receiving digital currencies. Subsequently, if any one of the parties can’t be identified, then the transaction would be deemed illegal in Texas.
The bill would encourage departments of banking, securities boards, and others to provide tools for users to distinguish between verified and unverified digital currency users.
Verified Identity Digital Currency
The bill specifies that if a user is already using a “verified identity digital currency” then there is no need to submit any identity verification to the state. However, it does not list examples of what constitutes a verified-identity digital currency.
The proposed legislation, should it be passed into law, could be considered an attempt at shutting out privacy-focused cryptocurrencies.
In order to paint the proposed bill in a more positive note, the document specifies that the Texas Department of Banking, Credit Union Commission, Texas Department of Public Safety, and State Securities Board shall collaborate to encourage the use of verified-identity digital currencies.
If passed, the proposals in the bill will come into effect starting Sep 1, 2019.
— Drew Hinkes (@propelforward) March 10, 2019
Texas vs. Privacy
Stephenson’s bill was highly criticized by the cryptocurrency community, which labeled it as an attack on the right to freely use digital currencies.
Moreover, the language used in the document is vague. Besides the usage of the “verified identity digital currency” term without any definition, it is practically unfeasible to enforce such legislation.
Users can transfer ownership of digital currencies to anyone in the world without any identification process. That’s the purpose of a decentralized public ledger — it removes the barriers that are characteristic of the traditional financial infrastructure.
The proposal is also in stark contrast to what the more crypto-friendly Wyoming is trying to implement. As a result, the law would just motivate cryptocurrency users to avoid Texas as a jurisdiction for their transactions.
What do you think of this initial proposal in Texas? Will Texas just isolate itself with such a cryptocurrency-unfriendly bill? Share your opinion in the comments below!
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