by Jude Ayua
The US State of Pennsylvania has passed a bill entitled the Digital Assets Authorization Act, which aims to protect residents’ rights to use and store cryptocurrency, Forbes reported. The Pennsylvania House of Representatives passed the bill popularly known as “Bitcoin Rights” on 22 October 2024 with a majority of 176 to 26 votes. The voting comprised 76 Democrats and 100 Republican members of the House. The bill will be transmitted to the Pennsylvania Senate for its consideration after the upcoming US election in November, and would be sent to Governor Josh Shapiro if approved.
Pennsylvania has taken this move amidst the federal regulatory uncertainty over the ever-growing digital asset market, which is currently worth $2 trillion.
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Satoshi Action Fund’s advocacy
The Bitcoin advocacy group Satoshi Action Fund (SAF) drafted the Bitcoin Rights bill and the state Rep. Mike Cabell introduced it to the House to educate lawmakers on the inner workings of the blockchain and Bitcoin. SAF promotes Bitcoin at the state level and lobbies lawmakers toward setting clear regulations for cryptocurrency, through its Bitcoin Rights advocacy. SAF has helped several state legislatures in the US to draft and push similar legislation. Out of 20 states, Oklahoma, Louisiana, Montana, and Arkansas have already passed the Bitcoin Rights law.
Major contents of the bill
- Definition of Digital Assets: The bill defines digital assets as “decentralized virtual currencies, cryptocurrencies and native electronic assets, including stablecoins and NFTs.” Conversely, the bill excludes central bank digital currencies and other government-controlled digital assets from its definition.
- Digital Assets as Means of Payment: The bill prohibits state and local governments from restricting individuals and businesses from accepting digital assets as payment for legal goods and services. This implies an approval of digital assets such as bitcoin and other cryptocurrencies as means of payment. However, this does not also mean that these digital assets will become legal tender.
- Digital Assets Rights: The bill protects the right of individuals and businesses to maintain self-custody of digital assets using hardware or self-hosted wallets. It also empowers Pennsylvania residents to control their digital assets independently.
- Digital Assets Taxes: The bill also contains tax provisions that, apart from standard taxes applicable to digital assets transactions, there will be no additional taxes, withholdings, or charges based on the use of digital assets for payments.
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Other state legislation in the US
Louisiana
On 17 September 2024, Louisiana became the first US state to accept cryptocurrency payments for government services. In a press release from Louisiana State Treasurer John Fleming, Louisiana residents can now pay for government services using bitcoin, Bitcoin Lightning, and USD Coin from private crypto wallets. The Louisiana Department of Wildlife and Fisheries processed the first cryptocurrency payment on September 17.
The state has viewed this development as a step toward improving government-citizen relationships.
“By introducing cryptocurrency as a payment option, we’re not just innovating; we’re providing our citizens with flexibility and freedom in interacting with state services,” Fleming noted.
Florida
The State of Florida has presented a Bill to the Senate proposing regulatory clarity to state chartered bank and trust companies seeking to participate in ‘digital trust business’. The bill also covers banks issuing stablecoins. So far, it is yet to receive a Committee hearing.
The key highlights of Florida’s proposed legislation include the required application process and risk analysis for banks participating in cryptocurrency transactions. Notably too, the bill’s proposed stablecoin requirements align to those proposed in Federal legislation. For example, the requirement for backing assets with short dated Treasuries, reverse repurchase agreements or bank deposits.
Key Takeaways
1. Private Sector Advocacy:
The SAF’s policy advocacy for digital assets is commendable and worth emulating. It serves as a good model for Bitcoin, cryptocurrency, and Blockchain advocacy groups in the US and worldwide, especially in countries with uncertain and unfriendly regulatory approaches to digital assets.
In Nigeria, several advocacy groups such as FinTech Association of Nigeria (FintechNGR), Stakeholders in Blockchain Association of Nigeria (SiBAN), Blockchain Nigeria User Group, and Blockchain Industry Coordinating Committee of Nigeria, have been making efforts to protect the industry. So far, SiBAN and FintechNGR have been involved in policy advocacy to the extent of getting engaged as members of the National Blockchain Policy Steering Committee. However, unlike SAF in the US, legislation has not yet arisen from any of these groups.
In the UK, Stand With Crypto and British Blockchain Association (BBA) are the leading voices in cryptocurrency and digital assets policy advocacy. BBA also serves as the Secretariat of the All-Party Parliamentary Group (APPG). In May 2024, BBA hosted a Parliamentary Industry Roundtable, focusing on “the UK’s pivotal role in crafting a future roadmap for blockchain, underlining the importance of investing in skills and training for this transformative technology.” The APPG, which aims to “explore a range of Blockchain and Web3 related domains,” has proposed Working Groups and meetings covering policy matters including “Blockchain for Government & UK Public Services,” which advocates the use of “Blockchain for Public Good in the UK,” “e-Voting,” and “Blockchain based Decentralised Digital ID,” among others.
In the Middle East, Blockchain Research Institute Middle East (BRIME), brings together top industry leaders, academics, policy-makers, entrepreneurs and researchers to research blockchain technology, focusing “on the strategic implications of blockchain technology on business, government and society in the Middle East.” In June 2023, BRIME partnered with Saudi IR4LAB, a Saudi-based company specialized in disruptive technologies such as Blockchain and Artificial Intelligence, to spur Blockchain adoption in Saudi Arabia and the Middle East-North Africa region.
It is important for groups in the private sector to continue to advocate for digital assets policies and push for legislation in the industry.
2. Digital Assets Legislation at State Level
States in the US have taken steps to legislate for the digital assets industry, while the Federal is still depending on its agencies to regulate the industry. Meanwhile, federal agencies such as the Securities and Exchange Commission (SEC), are seen as stifling the industry instead of giving it room for growth. State governments in countries where the federal government is lagging in digital assets regulation may consider adopting the approach of states in the US.
In Russia, Duma was the first state to legalize crypto mining in July 2024 to allow companies to register as legal entities. The legalization preceded the Russian Parliament’s law to legalize Bitcoin mining and the use of bitcoin in international payments. It increased crypto mining activities in the state and generated about 50 billion rubles (approximately $556 million) for the state.
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About the Author: Jude Ayua is a policy analyst at CAB. A lawyer, Jude is an associate at Infusion Lawyers where he is a member of the Blockchain & Virtual Assets Group. He is also a member of the Policy & Regulations Committee of the Stakeholders in Blockchain Technology Association of Nigeria (SiBAN). Jude reports and writes on crypto policy and regulations. jude@infusionlawyers.com
