Earlier this week, Republican Senator Phil Stephenson proposed bill HB 4371 in the Texas House, which sought to introduce numerous restrictions on cryptocurrency transactions. The bill specifically stated that users should only be able to send digital assets to wallets with identifiable owners.
Naturally, the bill has been met with near universal criticism from the cryptocurrency community as it threatens to kill the basic foundation and advantages of the technology.
Say No to Crypto Regulation Bill
Shortly after the proposal, Wyoming House Representatives Tyler Lindholm and Caitlin Long launched a scathing attack against Texas’ crypto regulation bill.
Wall Street veteran Caitlin Long called it a draconian law that would do more harm than good. She went on to criticize Phil Stephenson for proposing a law that would likely eliminate the entire digital currency industry in the region. Furthermore, enforcing the steps outlined in the proposal would be largely impractical and unnecessary.
User privacy is a key pillar of digital currencies and undertaking compulsory KYC measures would be bad for the industry. She concluded by labeling the proposed set of regulations as ‘worse than BitLicense,’ referring to the set of virtual currency regulations put in place by the New York State Department of Financial Services (NYSDFS) in Aug 2015.
Caitlin Long has watched multiple businesses and innovative ideas be born and die due to regulatory hurdles during her 22-year career in the financial industry. She warned how this bill introduced by Phil Stephenson would be a step backward for the blockchain and crypto industry in Texas.
It is reasonable to expect that the contents of the bill will only apply within the geographical boundary of the state and not affect those outside Texas. However, Long said that it is not clear if these laws will apply in the event that someone outside Texas initiated a crypto transaction with a Texas-based resident.
Affected companies will be forced to either shut down or move to a different state. At this point, Tyler Lindholm stepped in to say that he was more than willing to help affected cryptocurrency businesses relocate to Wyoming. Lindholm, however, did not clearly criticize the bill, likely due to his political commitments.
Notably, both Lindholm and Stephenson are Republican leaders. Nevertheless, they were both sympathetic to the cryptocurrency industry and promised easier and simpler policies in Wyoming.
The Battle for Privacy
There is no doubt that Phil Stephenson’s proposed bill is bad news for the digital currency and blockchain industry. This is compounded by the fact that the bill proposes a blanket ban on cryptocurrency transactions between wallets with unidentified owners.
The Senator also wants all cryptocurrency users to comply with KYC processes in a bid to track the movement of digital currency. He floated the idea that the Texas Department of Banking, Credit Union Commission, Texas Department of Public Safety, and State Securities Board have a right to ensure strict adherence to KYC rules.
The proposed bill could be enforced into law as early as Sept 1, 2019, if approved by the Texas House.
Do you think the proposed set of regulations could kill innovation in the blockchain and crypto industry? Let us know your thoughts in the comments below!