Adoption & community - Why Ohio’s State Treasurer Backs Decision to Accept BTC For Tax Payments

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Why Ohio’s State Treasurer Backs Decision to Accept BTC For Tax Payments - Bitcoin Magazine

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As tax season is rapidly approaching, some states, like Ohio, have decided to set a new standard for the rest of the country to follow. Back in November, Ohio became the first state in the U.S. to announce that it would now be possible to pay taxes using bitcoin.



While Ohio is first in actually implementing this for its business residents, it’s certainly not the first one to try. Other U.S. states, like <a href="https://www.coindesk.com/illinois-has-been-quietly-considering-bitcoin-for-tax-payments">Illinois</a>, <a href="https://www.coindesk.com/arizonas-governor-signs-latest-blockchain-bill-into-law">Arizona</a>, and <a data-original-title="" href="https://www.coindesk.com/lack-understanding-derails-georgias-bitcoin-tax-bill-says-state-senator">Georgia</a> have previously attempted to pass legislation allowing state taxes to be paid with cryptocurrency; however, such attempts have been rejected by state lawmakers or have not yet taken final form.



State of Ohio Treasurer, Josh Mandel, told Bitcoin Magazine that he’s been a crypto-enthusiast since 2014. Implementing his vision today, Ohio business owners are now able to register and resolve their tax disputes and/or liabilities online, with their payments processed by a designated cryptocurrency payment service provider.



Bitcoin Magazine spoke with Mandel about why Ohio’s decision to embrace these new technologies is a step toward the state becoming a leader for the rest of the country. 



<h4>Why Is This Good for Ohio?</h4>



With this announcement, Ohio has announced to the rest of the country that it is at the forefront of new technologies, specifically as it pertains to blockchain technology and cryptocurrency. By opening up its doors to entrepreneurs and businesses dabbling in these digital realms, Ohio hopes to welcome new types of ventures across its state lines.



“Our biggest motive here was to give taxpayers more options in paying their taxes,” Mandel explained. “Secondly, we wanted to project to the rest of the country that Ohio is embracing technology and is a place that is welcoming software developers and entrepreneurs who want to build a blockchain business here in the State of Ohio. By launching Ohiocrypto.com, we are planting the flag here in the state, and showing that we are a leader.”



Mandel said that he and his office have been working on launching Ohiocrypto.com for a good portion of this year, emphasizing that this new system will yield many positive reverberations for years to come.



<h4>You Don’t Have to Be a Computer Whiz or Crypto Expert to Participate</h4>



The good news is, you don’t have to be a computer expert or a crypto expert in order to use Ohiocrypto.com.



One benefit, according to Mandel, “will obviously be providing business taxpayers with another option in which to settle their taxes, which is easy and intuitive for them to use.”



However, it’s important to note that this is only available to Ohio business owners — not individuals — to settle their private taxes.



<h5>Phase One</h5>



Phase I of Ohiocrypto.com, according to Mandel, allows Ohio businesses to pay<a href="https://ohiocrypto.com/faq"> 23 different business taxes</a> in cryptocurrency, specifically with bitcoin. Here is a sample of the most commonly paid business taxes, which are part of the Ohiocrypto.com system:







<ul><li>Cigarette/Other Tobacco Products </li><li>Commercial Activity Tax (CAT) </li><li>Petroleum Activity (PAT) </li><li>Public Utilities Tax (PUT) </li><li>Sales Tax (ST) </li><li>Withholding Tax (WHT) </li><li>Interest on Lawyer’s Trust Accounts (IOLTA) </li><li>Motor Vehicle Fuel (MVFT)</li></ul>







<h5>Phase Two</h5>



“In Phase II, we hope to expand Ohiocrypto.com to include individual personal taxes, and also to expand beyond just bitcoin and include other cryptocurrencies as well. We thought the most intuitive and responsible way to begin this initiative, because it’s the first time it’s ever been done in America, is to start it off right — and that is by only allowing businesses to pay with bitcoin, and expand it out from there.”



<h4>A New, Inexpensive Way to Pay Your Taxes</h4>



Not that any of us enjoy coughing up the green each year, but Mandel emphasized that one of the major benefits to the Ohio taxpayer is that, by using Ohiocrypto.com, the state is providing a cost-cutting mechanism when taxpayers go online.



“Prior to the launching of Ohiocrypto.com, the state allowed for taxpayers to pay their taxes in different ways — you could pay via check with no processing fee; you could pay via ACH with no processing fee; or you could pay via credit card with a 2.5 percent processing fee. But, the fee to pay via cryptocurrency, e.g. bitcoin, is only going to be 1 percent, which is less than paying via credit card.”



<h5>OhioCrypto.com</h5>



Mandel emphasized that Ohiocrypto.com is an initiative open to taxpayers of all different ages, stripes and geographic parts of the state. Once the taxpayer is successfully registered on the site and has entered their tax payment information, the amount of cryptocurrency in the compatible wallet that is used to pay the invoice is immediately converted from bitcoin to U.S. dollars and processed through <a href="https://bitpay.com/">BitPay</a>.



“Most likely, I think we will see heavier use by smaller/medium size companies, privately owned, and probably some taxpayers in the younger demographic,” the Ohio Treasurer added.



“But, ultimately, as awareness builds, we will see widespread use — from a mom-and-pop diner to Fortune 500 companies. We are excited about the launch of this and we have a great partner in this initiative with BitPay.”



Mandel told us that BitPay has been very responsive to its office, bending over backwards in order to ensure that the site is developed in a way that is extra safe and extra secure so that taxpayer money is protected at all costs.



“We are thrilled to see Josh and State of Ohio taking this initiative,” Stephen Pair, co-founder and CEO of BitPay, told Bitcoin Magazine.



“One of the things we’ve done at BitPay over the years is to talk to companies in the blockchain industry help them work with their vendors to sign up and pay their bills with crypto. For example, an exchange has to pay vendors and suppliers. They would obviously prefer to pay their bills via crypto, which helps to grow the ecosystem and benefits their own exchange business. Similarly, all these businesses have to pay taxes as well and we are thrilled to help Ohio businesses pay their taxes this way.”



It should be noted that at no point will the Ohio Treasurer’s office hold cryptocurrency, mine it, or invest in it.



<h4>Ohio Is Looking to Host a Blockchain and Cryptocurrency-Friendly Environment</h4>



The state also hopes to benefit by branding itself as a place that is blockchain friendly, cryptocurrency friendly, and open for business when it comes to technology.



According to Mandel, this first step has put Ohio on the map in becoming a leader in the blockchain technology and cryptocurrency space.



Mandel, in addition to selected representatives from the treasurer’s office, recently attended the four-day<a href="https://www.blocklandcleveland.com/"> Blockland Conference</a> in Cleveland, where software developers, entrepreneurs and business leaders came together to learn how to inspire entrepreneurs and showcase the region as a potential hub for new technologies and a national leader in blockchain technology. 



The lineup of speakers featured Beth Mooney, CEO at Cleveland-based KeyCorp; AT&T Communications CEO, John Donovan; Jerry Cuomo, an IBM vice president focused on the blockchain; Oracle Corp. CEO, Mark Hurd; and Wikipedia co-founder, Larry Sanger.



<h4>What Challenges Lie Ahead?</h4>



It would seem that in a year filled with data breaches and security incidents with major players like Facebook, Equifax and other institutions, that this would seem all the riskier.



Bitcoin Magazine also spoke with Ari Lewis, cryptocurrency advisor to the State of Ohio Treasurer’s office, on this matter.



“We spent a lot of time and effort in extensively vetting payment processors,” Lewis emphasized. “We were extremely confident in choosing BitPay because they were first in class in security and in guaranteeing taxpayer monies would be safe. So, for us, this was not a trial and error, and we see this as a program where we feel confident that taxpayer money is secure and all the transactions occurring are secured through the payment system.”



Photo Credit: Josh Mandell / State of Ohio Treasurer’s Office

Bitcoin Magazine provides news, analysis, information, commentary and price data about Bitcoin.

Bitcoin Magazine

Andrew is an internet attorney, author, adjunct law professor, and media consultant for ABC, FOX, and NBC in Dayton, Ohio. He writes on social media crime, technology, privacy &amp; digital currency.

Andrew Rossow

Back in November, Ohio became the first state in the U.S. to announce that it would now be possible to pay taxes using bitcoin. State Treasurer Josh Mandel explains why.

Why Ohio&rsquo;s State Treasurer Backs Decision to Accept BTC For Tax Payments

As tax season is rapidly approaching, some states, like Ohio, have decided to set a new standard for the rest of the country to follow. Back in November, Ohio became the first state in the U.S. to announce that it would now be possible to pay taxes using bitcoin. While Ohio is first in actually implementing this for its business residents, it&rsquo;s certainly not the first one to try. Other U.S. states, like Illinois, Arizona, and Georgia have previously attempted to pass legislation allowing state taxes to be paid with cryptocurrency; however, such attempts have been rejected by state lawmakers or have not yet taken final form. State of Ohio Treasurer, Josh Mandel, told Bitcoin Magazine that he&rsquo;s been a crypto-enthusiast since 2014. Implementing his vision today, Ohio business owners are now able to register and resolve their tax disputes and/or liabilities online, with their payments processed by a designated cryptocurrency payment service provider. Bitcoin Magazine spoke with Mandel about why Ohio&rsquo;s decision to embrace these new technologies is a step toward the state becoming a leader for the rest of the country. Why Is This Good for Ohio? With this announcement, Ohio has announced to the rest of the country that it is at the forefront of new technologies, specifically as it pertains to blockchain technology and cryptocurrency. By opening up its doors to entrepreneurs and businesses dabbling in these digital realms, Ohio hopes to welcome new types of ventures across its state lines. &ldquo;Our biggest motive here was to give taxpayers more options in paying their taxes,&rdquo; Mandel explained. &ldquo;Secondly, we wanted to project to the rest of the country that Ohio is embracing technology and is a place that is welcoming software developers and entrepreneurs who want to build a blockchain business here in the State of Ohio. By launching Ohiocrypto.com, we are planting the flag here in the state, and showing that we are a leader.&rdquo; Mandel said that he and his office have been working on launching Ohiocrypto.com for a good portion of this year, emphasizing that this new system will yield many positive reverberations for years to come. You Don&rsquo;t Have to Be a Computer Whiz or Crypto Expert to Participate. The good news is, you don&rsquo;t have to be a computer expert or a crypto expert in order to use Ohiocrypto.com. One benefit, according to Mandel, &ldquo;will obviously be providing business taxpayers with another option in which to settle their taxes, which is easy and intuitive for them to use.&rdquo; However, it&rsquo;s important to note that this is only available to Ohio business owners &mdash; not individuals &mdash; to settle their private taxes. Phase One Phase I of Ohiocrypto.com, according to Mandel, allows Ohio businesses to pay 23 different business taxes in cryptocurrency, specifically with bitcoin. Here is a sample of the most commonly paid business taxes, which are part of the Ohiocrypto.com system: Cigarette/Other Tobacco ProductsCommercial Activity Tax (CAT)Petroleum Activity (PAT)Public Utilities Tax (PUT)Sales Tax (ST)Withholding Tax (WHT)Interest on Lawyer&rsquo;s Trust Accounts (IOLTA)Motor Vehicle Fuel (MVFT) Phase Two &ldquo;In Phase II, we hope to expand Ohiocrypto.com to include individual personal taxes, and also to expand beyond just bitcoin and include other cryptocurrencies as well. We thought the most intuitive and responsible way to begin this initiative, because it&rsquo;s the first time it&rsquo;s ever been done in America, is to start it off right &mdash; and that is by only allowing businesses to pay with bitcoin, and expand it out from there.&rdquo; A New, Inexpensive Way to Pay Your Taxes. Not that any of us enjoy coughing up the green each year, but Mandel emphasized that one of the major benefits to the Ohio taxpayer is that, by using Ohiocrypto.com, the state is providing a cost-cutting mechanism when taxpayers go online. &ldquo;Prior to the launching of Ohiocrypto.com, the state allowed for taxpayers to pay their taxes in different ways &mdash; you could pay via check with no processing fee; you could pay via ACH with no processing fee; or you could pay via credit card with a 2.5 percent processing fee. But, the fee to pay via cryptocurrency, e.g. bitcoin, is only going to be 1 percent, which is less than paying via credit card.&rdquo; OhioCrypto.com Mandel emphasized that Ohiocrypto.com is an initiative open to taxpayers of all different ages, stripes and geographic parts of the state. Once the taxpayer is successfully registered on the site and has entered their tax payment information, the amount of cryptocurrency in the compatible wallet that is used to pay the invoice is immediately converted from bitcoin to U.S. dollars and processed through BitPay. &ldquo;Most likely, I think we will see heavier use by smaller/medium size companies, privately owned, and probably some taxpayers in the younger demographic,&rdquo; the Ohio Treasurer added. &ldquo;But, ultimately, as awareness builds, we will see widespread use &mdash; from a mom-and-pop diner to Fortune 500 companies. We are excited about the launch of this and we have a great partner in this initiative with BitPay.&rdquo; Mandel told us that BitPay has been very responsive to its office, bending over backwards in order to ensure that the site is developed in a way that is extra safe and extra secure so that taxpayer money is protected at all costs. &ldquo;We are thrilled to see Josh and State of Ohio taking this initiative,&rdquo; Stephen Pair, co-founder and CEO of BitPay, told Bitcoin Magazine. &ldquo;One of the things we&rsquo;ve done at BitPay over the years is to talk to companies in the blockchain industry help them work with their vendors to sign up and pay their bills with crypto. For example, an exchange has to pay vendors and suppliers. They would obviously prefer to pay their bills via crypto, which helps to grow the ecosystem and benefits their own exchange business. Similarly, all these businesses have to pay taxes as well and we are thrilled to help Ohio businesses pay their taxes this way.&rdquo; It should be noted that at no point will the Ohio Treasurer&rsquo;s office hold cryptocurrency, mine it, or invest in it. Ohio Is Looking to Host a Blockchain and Cryptocurrency-Friendly Environment. The state also hopes to benefit by branding itself as a place that is blockchain friendly, cryptocurrency friendly, and open for business when it comes to technology. According to Mandel, this first step has put Ohio on the map in becoming a leader in the blockchain technology and cryptocurrency space. Mandel, in addition to selected representatives from the treasurer&rsquo;s office, recently attended the four-day Blockland Conference in Cleveland, where software developers, entrepreneurs and business leaders came together to learn how to inspire entrepreneurs and showcase the region as a potential hub for new technologies and a national leader in blockchain technology. The lineup of speakers featured Beth Mooney, CEO at Cleveland-based KeyCorp; AT&amp;T Communications CEO, John Donovan; Jerry Cuomo, an IBM vice president focused on the blockchain; Oracle Corp. CEO, Mark Hurd; and Wikipedia co-founder, Larry Sanger. What Challenges Lie Ahead? It would seem that in a year filled with data breaches and security incidents with major players like Facebook, Equifax and other institutions, that this would seem all the riskier. Bitcoin Magazine also spoke with Ari Lewis, cryptocurrency advisor to the State of Ohio Treasurer&rsquo;s office, on this matter. &ldquo;We spent a lot of time and effort in extensively vetting payment processors,&rdquo; Lewis emphasized. &ldquo;We were extremely confident in choosing BitPay because they were first in class in security and in guaranteeing taxpayer monies would be safe. So, for us, this was not a trial and error, and we see this as a program where we feel confident that taxpayer money is secure and all the transactions occurring are secured through the payment system.&rdquo; Photo Credit: Josh Mandell / State of Ohio Treasurer&rsquo;s Office

Bitcoin Magazine provides news, analysis, information, commentary and price data about Bitcoin, blockchain tech, and other cryptocurrencies.

Why Ohio’s State Treasurer Backs Decision to Accept BTC For Tax Payments

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Investing - Thomson Reuters Partners With Startup for Next Level Derivatives Exchange

Thomson Reuters Partners With Startup for Next Level Derivatives Exchange - Bitcoin Magazine

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Investing

Blockchain

Derivatives

Exchange

Level01

Reuters

Thomson Reuters (<a data-original-title="" href="https://www.thomsonreuters.com/en/careers/careers-blog/what-does-thomson-reuters-do.html">TR</a>) provides trusted data and information to professionals across the legal, tax and accounting, and news and media industries. Operating in more than 100 countries, TR lists its shares on both the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSE). The company has now expanded its scope and entered into the realm of blockchain technology and artificial intelligence (A.I.). 



Last month, the peer-to-peer (P2P) blockchain startup Level01<a href="https://level01.io/2018/09/24/thomson-reuters-helps-launch-level01-derivatives-exchange-on-blockchain-to-make-brokers-obsolete/"> announced</a> its collaboration with TR in order to create a “derivatives” exchange that would change how parties interact with one another, without the fear of losing funds to unknown third parties.



Level01’s proprietary platform, a peer-to-peer (P2P) derivatives exchange,<a href="https://medium.com/level01io/level01-a-primer-on-the-game-changing-peer-to-peer-derivatives-exchange-de2949d81f1f"> allows</a> investors to trade options contracts directly with one another, without requiring an intermediary or broker.



A “<a data-original-title="" href="https://www.investopedia.com/terms/d/derivative.asp">derivative</a>” is a financial security that holds a value reliant upon or derived from an underlying asset or group of assets. An “<a data-original-title="" href="https://www.investopedia.com/terms/e/exchange-traded-derivative.asp">exchange traded derivative</a>” is a financial instrument that trades on a regulated exchange and whose value is based on the value of another asset. 



In the world of blockchain, making it a decentralized peer-to-peer platform changes the game.



“At its beginning stages, we were looking at both Bloomberg and TR,” Jonathan Loi, the CEO of Level01, told Bitcoin Magazine.



“From our perspective, TR proved to be a more competent and receptive company because the individuals we were in collaboration with went the extra mile to ensure things were done moving forward.”



<h4>How Does It Work?</h4>



Combining distributed ledger technology (DLT) for transparent and automated trade settlement on the blockchain with A.I. analytics provides fair value pricing to counterparties that is based on current and retrospective market data. 



Consumers and investors, however, are constantly at war with fund deposits/withdrawals, multiple tier-identity verifications and wallet security. 



By implementing this new platform in collaboration with TR, Level01 hopes to remove this friction and allow investors to focus fully on their trading activities.



“Level01 utilizes TR’s data feeds as a trusted source for its A.I. deep-learning algorithms, providing real-time pricing analytics on derivative contracts,” Charles Wong, the chief marketing officer of Level01, explained to Bitcoin Magazine. “Additionally, the data is also used to ensure transparent, timely and accurate settlement of derivative contracts upon contract maturity.”



“We have painstakingly designed a UI that caters for both simple and advanced users. More importantly, new investors using Level01 are assured of the fairest market pricing: e.g. prices coming directly from main industry players like Thomson Reuters and open for all to view at ‘interbank’ rates. New investors are then able to make informed business decisions based on this real-time data, cognizant of sudden spikes or changes in the market.”



According to Thomson Reuters, this is more than just a collaboration with Level01.



“Fundamentally, what we do is supply the non-core technology that helps connect Level01 to the market, plus fundamentally supplying the data that feeds into the machine,” said Michael Go, Thomson Reuters’ Asia Pacific head of trading markets.



“We are the leader in this field and beyond this collaboration, we are taking in crypto-related information, platforms, and exchanges, while diving into blockchain technology.”



“When we are talking about ‘investors,’ it’s important to identify them as ‘institutional investors,’” Loi emphasized. 



“These institutional investors that invest in larger amounts can assume roles of ‘liquidity providers’ within the platform. A function of the Level01 platform allows staking of the native token, Level01 Exchange (LVX), to host ‘Trading Rooms’ where the host earns commissions from providing the group trading functionality. Since these tokens are staked and cannot be used/exchanged for long periods of time, this reinforces the pricing of the LVX token by reducing sell pressure from the markets.”



According to the company, Level01 has already begun its plans of launching the public beta version of the platform.

Last month, the peer-to-peer (P2P) blockchain startup Level01 announced its partnership with TR in order to create a &ldquo;derivatives&rdquo; exchange that would change how parties interact with one another, without the fear of losing funds to unknown third...

Thomson Reuters Partners With Startup for Next Level Derivatives Exchange

Thomson Reuters (TR) provides trusted data and information to professionals across the legal, tax and accounting, and news and media industries. Operating in more than 100 countries, TR lists its shares on both the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSE). The company has now expanded its scope and entered into the realm of blockchain technology and artificial intelligence (A.I.). Last month, the peer-to-peer (P2P) blockchain startup Level01 announced its collaboration with TR in order to create a &ldquo;derivatives&rdquo; exchange that would change how parties interact with one another, without the fear of losing funds to unknown third parties. Level01&rsquo;s proprietary platform, a peer-to-peer (P2P) derivatives exchange, allows investors to trade options contracts directly with one another, without requiring an intermediary or broker. A &ldquo;derivative&rdquo; is a financial security that holds a value reliant upon or derived from an underlying asset or group of assets. An &ldquo;exchange traded derivative&rdquo; is a financial instrument that trades on a regulated exchange and whose value is based on the value of another asset. In the world of blockchain, making it a decentralized peer-to-peer platform changes the game. &ldquo;At its beginning stages, we were looking at both Bloomberg and TR,&rdquo; Jonathan Loi, the CEO of Level01, told Bitcoin Magazine. &ldquo;From our perspective, TR proved to be a more competent and receptive company because the individuals we were in collaboration with went the extra mile to ensure things were done moving forward.&rdquo; How Does It Work? Combining distributed ledger technology (DLT) for transparent and automated trade settlement on the blockchain with A.I. analytics provides fair value pricing to counterparties that is based on current and retrospective market data. Consumers and investors, however, are constantly at war with fund deposits/withdrawals, multiple tier-identity verifications and wallet security. By implementing this new platform in collaboration with TR, Level01 hopes to remove this friction and allow investors to focus fully on their trading activities. &ldquo;Level01 utilizes TR&rsquo;s data feeds as a trusted source for its A.I. deep-learning algorithms, providing real-time pricing analytics on derivative contracts,&rdquo; Charles Wong, the chief marketing officer of Level01, explained to Bitcoin Magazine. &ldquo;Additionally, the data is also used to ensure transparent, timely and accurate settlement of derivative contracts upon contract maturity.&rdquo; &ldquo;We have painstakingly designed a UI that caters for both simple and advanced users. More importantly, new investors using Level01 are assured of the fairest market pricing: e.g. prices coming directly from main industry players like Thomson Reuters and open for all to view at &lsquo;interbank&rsquo; rates. New investors are then able to make informed business decisions based on this real-time data, cognizant of sudden spikes or changes in the market.&rdquo; According to Thomson Reuters, this is more than just a collaboration with Level01. &ldquo;Fundamentally, what we do is supply the non-core technology that helps connect Level01 to the market, plus fundamentally supplying the data that feeds into the machine,&rdquo; said Michael Go, Thomson Reuters&rsquo; Asia Pacific head of trading markets. &ldquo;We are the leader in this field and beyond this collaboration, we are taking in crypto-related information, platforms, and exchanges, while diving into blockchain technology.&rdquo; &ldquo;When we are talking about &lsquo;investors,&rsquo; it&rsquo;s important to identify them as &lsquo;institutional investors,&rsquo;&rdquo; Loi emphasized. &ldquo;These institutional investors that invest in larger amounts can assume roles of &lsquo;liquidity providers&rsquo; within the platform. A function of the Level01 platform allows staking of the native token, Level01 Exchange (LVX), to host &lsquo;Trading Rooms&rsquo; where the host earns commissions from providing the group trading functionality. Since these tokens are staked and cannot be used/exchanged for long periods of time, this reinforces the pricing of the LVX token by reducing sell pressure from the markets.&rdquo; According to the company, Level01 has already begun its plans of launching the public beta version of the platform.

Last month, the peer-to-peer (P2P) blockchain startup Level01 announced its partnership with TR in order to create a “derivatives” exchange that would change how parties interact with one another, without the fear of losing funds to unknown third parties.

Thomson Reuters Partners With Startup for Next Level Derivatives Exchange –

https://bitcoinmagazine.com/articles/thomson-reuters-partners-startup-next-level-derivatives-exchange

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Thomson Reuters Partners With Startup for Next Level Derivatives Exchange - bitcoinmagazine.com

Regulation - A Basic Guide to the Digital Age: Breaking Down Congress’ Crypto Hearing

A Basic Guide to the Digital Age: Breaking Down Congress’ Crypto Hearing - Bitcoin Magazine

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Regulation

Congress

Crypto hearing

Cryptocurrencies

Yesterday, Congress addressed in two full hearings why it’s time to start taking a closer look at why and how digital assets, including cryptocurrencies, are impacting U.S. marketplaces. 



The following condensed information is a run-down of what the House Committee on Agriculture and the U.S. Commodity Futures Trading Commission (CFTC) discussed during the hearings regarding cryptocurrency and distributed ledger technology (DLT).



<h4>Congress Has a Vested Interest in Securities and Economic Growth</h4>



Some might find it odd to see the House Committee on Agriculture represented at a hearing on digital assets and their related technologies. But Chairman Michael Conaway made it very clear why the House Agriculture Committee was there, explaining that they have a vested interest in shaping and constructing the definition of a security because it directly impacts the definition of a commodity.



Working in tandem, both Chairman Conaway and Ranking Member Collin Peterson identified five main goals for clarifying blockchain industry regulation:







<ul><li>Promoting a safe, efficient and transparent tokens market </li><li>Proper regulation doesn’t always mean intrusive regulation </li><li>Identifying whether tokens are securities </li><li>Parsing through whether our current laws are appropriate to apply </li><li>Ensuring enough oversight to help the space grow responsibly </li></ul>







<h4>Understanding Why Blockchain Technology Is Valuable</h4>



The panel of witnesses sitting on Capitol Hill presented in-depth yet simplistic explanations for what needs to be done. Applying those proposals, however, is an entirely different conversation.



<h5>Observing the Communities Using the Technology</h5>







<figure class="wp-block-image"><img alt="hearing2" class="richtext-image normal" height="427" src="https://fs.bitcoinmagazine.com/img/images/hearing2.original.jpg" width="640"></figure>



 



Joshua Fairfield addresses Congress about the value cryptocurrency potentially brings consumers. (Photo credit: HOUSE AGRICULTURE COMMITTEE)



According to Joshua Fairfield — William Donald Bain Family Professor of Law at Washington and Lee University School of Law in Staunton, VA — the potential value of blockchain technology is considerable. 



First, the technology has allowed for collaboration among communities of artists. 



Second, new forms of corporations have begun to rise up. 



Third, there is now a fast and low-cost check settlement opportunity, which helps to pave the way for immediate payments. 



Fourth, by digitizing securities, it helps to place everything in an easily accessible format for all participants. 



Fifth, having open and low-cost electronic mortgage and secure transactions filing systems in place helps ensure that the recording process of deeds and other property-related documents is secure.



Sixth, it provides for secure international remittances. 



Lastly, the potential to bring the voting system onto the blockchain helps to minimize the potential for fraud-related incidents, as we have recently witnessed with Russia in the 2016 presidential election. 



<h5>Expanding Online Property Rights is Vital to the Growth of Innovation</h5>



“Citizens need and want an expansion of their personal property rights online,” emphasized Fairfield. He went on to question whether the U.S. Securities and Exchange Commission’s (SEC’s) Howey Test is still the appropriate standard to apply. Instead, Fairfield proposed a more simplistic test — the “duck” test. “I believe that we should look to the outer bound to figure out what beneficial and damaging uses the technology presents,” he explained. “Look to how the communities are using it — then regulate.”



<h5>The Evolution from Tangible Property to Intangible Property</h5>



Fairfield pointed out that personal property has had some difficulty entering into the digital space. “We just don’t own that much personal property online,” he stated.



“Consider that people used to have record collections — now they have a subscription to Spotify. People used to have bookshelves — now they have Kindle accounts.”



But this behavior can be attributed to the early days of the internet, primarily movements like Napster, Limewire, Kazaa and online torrents. This led intellectual property (IP) owners to show concern as to the illegal copying and distribution of their work. “It took several decades to develop a technology like the blockchain, that could be traded, held, bought and sold — but not duplicated,” explained Fairfield.



The law professor concluded his proposal by stating that tokens aren’t just used as a security or a commodity, but rather as a way to represent our property interests and rights online — if we let it.  



<h4>Harmonizing Technology With Our Constitutional Rights</h4>







<figure class="wp-block-image"><img alt="hearing3" class="richtext-image normal" height="427" src="https://fs.bitcoinmagazine.com/img/images/hearin3.original.jpg" width="640"></figure>



 



Amber Baldet addresses Congress on how it can take a more proactive approach to regulation to support a blockchain becoming a global infrastructure, as the U.S. did with the internet. (Photo credit: HOUSE AGRICULTURE COMMITTEE)



The next witness, Amber Baldet, CEO and co-founder of Clovyr, emphasized the importance in balancing the value of this technology with the need for protecting consumers and national security.



<h5>Take a Cautious Approach to Thoughtful, Innovative Technologies</h5>



The biggest takeaway from Baldet’s proposals was that we need to understand how to strike a balance with this technology while still respecting our constitutionally protected rights. She emphasized “those technologies that might disrupt a business or add complexity of regulating the internet,” as these have the potential to represent both a critical infrastructure and a publicly shared good.



<h5>What’s the Next Killer App?</h5>



According to Baldet, the biggest application on the blockchain market is money — specifically, the concept of peer-to-peer (P2P) payments. “These P2P payments will grow into a daily part of our professional and personal lives,” she said.



As we begin looking at different payment instruments, we must go back to fundamentals and ensure we understand the purpose of “<a data-original-title="" href="https://www.investopedia.com/terms/b/bearer-instrument.asp">bearer instruments</a>.” These are documents that entitle its holder to rights of ownership or title to the underlying property, such as shares or bonds. If we are injecting blockchain technology and cryptocurrency into this space, it becomes even more relevant, as this technology can be applied to many things we own such as mortgages, securities, collectibles, IP rights and personal data. In a way, these new payment systems and accompanying currencies serve as unique “digital bearer assets,” as Baldet described. 



<h5>Observe Other Countries’ Behaviors</h5>



While both the U.S. government and the accompanying marketplace are struggling to understand and apply these technological frameworks, other areas of the world are beginning to embrace the industry despite its gray areas and are learning by doing. Take Malta and Switzerland, for example. Malta has already earned its name as the world’s blockchain island, and Zug, a Swiss city just south of Zürich, has been called “Crypto Valley” for the plethora of blockchain companies operating in its limits. 



In addition, Baldet also pointed to countries like Afghanistan and a handful of African countries that are looking to capitalize on the new technology. For example, in Afghanistan, blockchain technology has helped people like <a href="https://news.bitcoin.com/afghan-entrepreneur-empowers-women-through-bitcoin-in-afghanistan/">Roya Mahboob</a>, CEO and co-founder of Digital Citizen Fund, to enroll over 9,000 Afghan women and girls in education programs. In efforts of empowering women to start their own businesses, the next steps are to begin putting on Bitcoin conferences to help showcase their projects. 



<h5>Blockchain Technology Is Not the Answer to Every Problem</h5>



Most important, Baldet wants the world to recognize that the blockchain is not a panacea. “When it comes to electronic voting, we need to take extreme caution, as we aren’t ready to tackle the complex computer science and coordination problem,” she explained.



<h4>Why Venture Capitalists Can Benefit</h4>







<figure class="wp-block-image"><img alt="hearing 4" class="richtext-image normal" height="427" src="https://fs.bitcoinmagazine.com/img/images/hearing4.original.jpg" width="640"></figure>



 



Scott Kupor, Managing Partner, Andreessen Horowitz (Photo credit: HOUSE AGRICULTURE COMMITTEE)



“Crypto networks offer a new way to build digital services like any internet application that may exist today, such as ridesharing applications and social media applications,” said Scott Kupor, the managing partner at Andreessen Horowitz Capital Management, explaining that venture capitalists are interested in “crypto networks” as they relate to the crypto ecosystem. 



<h5>Historical Precedent Is a Good Indicator</h5>



According to Kupor, the success of community-based networks can be traced back to two major movements — the open-source movement and the open-protocol movement. The open-source software movement started back in 1983 and was considered to be somewhat of a radical notion at the time. 



Why is this relevant? Kupor goes on to explain.



A community of developers would publish their software and offer it up freely for others to modify and incorporate into their own projects. “This led to copyright initiatives,” explained Kupor. Today, open source is the primary development of software for the utilization of any data center, such as Linux- and Android-based applications. “This is extremely relevant when thinking about the potential for crypto networks, because we have platforms that are now able to support a variety of DApps [decentralized applications] and open-source ethos that encourage open innovation.”



On the other hand, open protocols are the structural foundation of the internet we are familiar with today. The idea behind these protocols is that the protocol wouldn’t change and would provide for a steadier process when it comes to understanding how the software infrastructure operates.



<h5>Introducing Tokens Into a New Generation</h5>



Tokens didn’t exist in prior generations, allowing for a direct financial incentive for community members to develop and govern their networks appropriately. “It’s the glue that binds the members in the community and provides incentives for all market participants,” said Kupor. “Understandably so, it creates a whole new set of challenges for regulators, consistent with recent statements from the SEC.”



Kupor ended proposing that a framework needs to be developed that requires a risk taking but, at the same time, provides for clarity and certainty to market participants, which results in market integrity.



<h4>Education Is Key: Don’t Be Foolish and Dismiss the Tech</h4>







<figure class="wp-block-image"><img alt="hearing 6" class="richtext-image normal" height="427" src="https://fs.bitcoinmagazine.com/img/images/hearing6.original.jpg" width="640"></figure>



 



Daniel Gorfine, Director of LabCFTC and Chief Innovation Officer of the CFTC, Washington, D.C. (Photo credit: HOUSE AGRICULTURE COMMITTEE)



Daniel Gorfine, CIO of the CFTC and director of LabCFTC, emphasized the need for us to continue studying and learning and to keep pace with an ever-evolving field.



“Given the potential to tokenize a broad range of economic assets, it is important to remind the public that digital assets can also be commodities or derivatives, depending on their term and how they are structured,” explained Gorfine. 



“Given its potential and its challenges, the CFTC chairman has made it clear that the proper response by regulators is not to dismiss the entire movement as misguided and foolish, but rather to take the time to learn and facilitate the promise, and guard against risks and bad actors,” he continued.



<h4>Opening the Finance Sector Up to the Blockchain</h4>







<figure class="wp-block-image"><img alt="hearing 5" class="richtext-image normal" height="427" src="https://fs.bitcoinmagazine.com/img/images/hearing5.original.jpg" width="640"></figure>



 



The Honorable Gary Gensler, Senior Lecturer, MIT Sloan School of Management (Photo credit: HOUSE AGRICULTURE COMMITTEE)



The former CFTC chair, Gary Gensler, provided five reasons for why he believes blockchain technology can make a real difference in the finance sector:







<ul><li>It lowers costs and risks in the financial sector. </li><li>By bringing it into this world of public policy frameworks, it minimizes chances for illicit activities, ensures financial stability and protects investors and consumers. </li><li>The SEC and CFTC have a role to play, as evidenced by their notices and enforcement actions. </li><li>The ICO market is ripe with scams and frauds, and bad actors have found out how to use this new currency, including state actors — e.g., recent news of the 12 alleged Russian officials, and talks of Venezuela attempting to raise money off their oil and outrunning the U.S. sanctions policy. </li><li>There are gaps in our laws because, first and foremost, cryptocurrency exchanges are attempting to act as state money transmitters, similar to how Western Union and MoneyGram operate. This cannot work due to the complexity and traceability issues associated with these exchanges. </li></ul>







Additionally, there is a lack of brokered access, where you don’t have brokers sending off or issuing <a href="https://www.investopedia.com/terms/f/form-1099-b.asp">1099-B’s</a> to individuals. It’s only now that issuers of securities in the space are coming into this field, but at a very slow rate. 



Finally, the unregulated, underlying crypto cash market is a mess, and it becomes very difficult for the CFTC to be able to predict future patterns or behaviors. 



Gensler ended his statement by proposing a question on whether the CFTC or some other agency should be given additional authority to regulate this underlying cash crypto market, believing the CFTC to be best suited for the task.



At the end of a very long day of hearings, Congress seemed to be very receptive to the idea of this new technology, but it is still concerned about ensuring that it is properly regulated where appropriate. To view the hearing in full, you can watch it <a data-original-title="" href="https://www.youtube.com/watch?v=_O9s4fuzvbQ">here</a>. 



All images authorized by House Agriculture Committee, July 19, 2018.

Yesterday, Congress addressed in two full hearings why it&rsquo;s time to start taking a closer look at why and how digital assets, including cryptocurrencies, are impacting U.S. marketplaces.

A Basic Guide to the Digital Age: Breaking Down Congress&rsquo; Crypto Hearing

Yesterday, Congress addressed in two full hearings why it&rsquo;s time to start taking a closer look at why and how digital assets, including cryptocurrencies, are impacting U.S. marketplaces. The following condensed information is a run-down of what the House Committee on Agriculture and the U.S. Commodity Futures Trading Commission (CFTC) discussed during the hearings regarding cryptocurrency and distributed ledger technology (DLT). Congress Has a Vested Interest in Securities and Economic Growth. Some might find it odd to see the House Committee on Agriculture represented at a hearing on digital assets and their related technologies. But Chairman Michael Conaway made it very clear why the House Agriculture Committee was there, explaining that they have a vested interest in shaping and constructing the definition of a security because it directly impacts the definition of a commodity. Working in tandem, both Chairman Conaway and Ranking Member Collin Peterson identified five main goals for clarifying blockchain industry regulation: Promoting a safe, efficient and transparent tokens marketProper regulation doesn&rsquo;t always mean intrusive regulationIdentifying whether tokens are securitiesParsing through whether our current laws are appropriate to applyEnsuring enough oversight to help the space grow responsibly Understanding Why Blockchain Technology Is Valuable. The panel of witnesses sitting on Capitol Hill presented in-depth yet simplistic explanations for what needs to be done. Applying those proposals, however, is an entirely different conversation. Observing the Communities Using the Technology. Joshua Fairfield addresses Congress about the value cryptocurrency potentially brings consumers. (Photo credit: HOUSE AGRICULTURE COMMITTEE) According to Joshua Fairfield &mdash; William Donald Bain Family Professor of Law at Washington and Lee University School of Law in Staunton, VA &mdash; the potential value of blockchain technology is considerable. First, the technology has allowed for collaboration among communities of artists. Second, new forms of corporations have begun to rise up. Third, there is now a fast and low-cost check settlement opportunity, which helps to pave the way for immediate payments. Fourth, by digitizing securities, it helps to place everything in an easily accessible format for all participants. Fifth, having open and low-cost electronic mortgage and secure transactions filing systems in place helps ensure that the recording process of deeds and other property-related documents is secure. Sixth, it provides for secure international remittances. Lastly, the potential to bring the voting system onto the blockchain helps to minimize the potential for fraud-related incidents, as we have recently witnessed with Russia in the 2016 presidential election. Expanding Online Property Rights is Vital to the Growth of Innovation. &ldquo;Citizens need and want an expansion of their personal property rights online,&rdquo; emphasized Fairfield. He went on to question whether the U.S. Securities and Exchange Commission&rsquo;s (SEC&rsquo;s) Howey Test is still the appropriate standard to apply. Instead, Fairfield proposed a more simplistic test &mdash; the &ldquo;duck&rdquo; test. &ldquo;I believe that we should look to the outer bound to figure out what beneficial and damaging uses the technology presents,&rdquo; he explained. &ldquo;Look to how the communities are using it &mdash; then regulate.&rdquo; The Evolution from Tangible Property to Intangible Property. Fairfield pointed out that personal property has had some difficulty entering into the digital space. &ldquo;We just don&rsquo;t own that much personal property online,&rdquo; he stated. &ldquo;Consider that people used to have record collections &mdash; now they have a subscription to Spotify. People used to have bookshelves &mdash; now they have Kindle accounts.&rdquo; But this behavior can be attributed to the early days of the internet, primarily movements like Napster, Limewire, Kazaa and online torrents. This led intellectual property (IP) owners to show concern as to the illegal copying and distribution of their work. &ldquo;It took several decades to develop a technology like the blockchain, that could be traded, held, bought and sold &mdash; but not duplicated,&rdquo; explained Fairfield. The law professor concluded his proposal by stating that tokens aren&rsquo;t just used as a security or a commodity, but rather as a way to represent our property interests and rights online &mdash; if we let it. Harmonizing Technology With Our Constitutional Rights. Amber Baldet addresses Congress on how it can take a more proactive approach to regulation to support a blockchain becoming a global infrastructure, as the U.S. did with the internet. (Photo credit: HOUSE AGRICULTURE COMMITTEE) The next witness, Amber Baldet, CEO and co-founder of Clovyr, emphasized the importance in balancing the value of this technology with the need for protecting consumers and national security. Take a Cautious Approach to Thoughtful, Innovative Technologies. The biggest takeaway from Baldet&rsquo;s proposals was that we need to understand how to strike a balance with this technology while still respecting our constitutionally protected rights. She emphasized &ldquo;those technologies that might disrupt a business or add complexity of regulating the internet,&rdquo; as these have the potential to represent both a critical infrastructure and a publicly shared good. What&rsquo;s the Next Killer App? According to Baldet, the biggest application on the blockchain market is money &mdash; specifically, the concept of peer-to-peer (P2P) payments. &ldquo;These P2P payments will grow into a daily part of our professional and personal lives,&rdquo; she said. As we begin looking at different payment instruments, we must go back to fundamentals and ensure we understand the purpose of &ldquo;bearer instruments.&rdquo; These are documents that entitle its holder to rights of ownership or title to the underlying property, such as shares or bonds. If we are injecting blockchain technology and cryptocurrency into this space, it becomes even more relevant, as this technology can be applied to many things we own such as mortgages, securities, collectibles, IP rights and personal data. In a way, these new payment systems and accompanying currencies serve as unique &ldquo;digital bearer assets,&rdquo; as Baldet described. Observe Other Countries&rsquo; Behaviors. While both the U.S. government and the accompanying marketplace are struggling to understand and apply these technological frameworks, other areas of the world are beginning to embrace the industry despite its gray areas and are learning by doing. Take Malta and Switzerland, for example. Malta has already earned its name as the world&rsquo;s blockchain island, and Zug, a Swiss city just south of Z&uuml;rich, has been called &ldquo;Crypto Valley&rdquo; for the plethora of blockchain companies operating in its limits. In addition, Baldet also pointed to countries like Afghanistan and a handful of African countries that are looking to capitalize on the new technology. For example, in Afghanistan, blockchain technology has helped people like Roya Mahboob, CEO and co-founder of Digital Citizen Fund, to enroll over 9,000 Afghan women and girls in education programs. In efforts of empowering women to start their own businesses, the next steps are to begin putting on Bitcoin conferences to help showcase their projects. Blockchain Technology Is Not the Answer to Every Problem. Most important, Baldet wants the world to recognize that the blockchain is not a panacea. &ldquo;When it comes to electronic voting, we need to take extreme caution, as we aren&rsquo;t ready to tackle the complex computer science and coordination problem,&rdquo; she explained. Why Venture Capitalists Can Benefit. Scott Kupor, Managing Partner, Andreessen Horowitz (Photo credit: HOUSE AGRICULTURE COMMITTEE) &ldquo;Crypto networks offer a new way to build digital services like any internet application that may exist today, such as ridesharing applications and social media applications,&rdquo; said Scott Kupor, the managing partner at Andreessen Horowitz Capital Management, explaining that venture capitalists are interested in &ldquo;crypto networks&rdquo; as they relate to the crypto ecosystem. Historical Precedent Is a Good Indicator. According to Kupor, the success of community-based networks can be traced back to two major movements &mdash; the open-source movement and the open-protocol movement. The open-source software movement started back in 1983 and was considered to be somewhat of a radical notion at the time. Why is this relevant? Kupor goes on to explain. A community of developers would publish their software and offer it up freely for others to modify and incorporate into their own projects. &ldquo;This led to copyright initiatives,&rdquo; explained Kupor. Today, open source is the primary development of software for the utilization of any data center, such as Linux- and Android-based applications. &ldquo;This is extremely relevant when thinking about the potential for crypto networks, because we have platforms that are now able to support a variety of DApps [decentralized applications] and open-source ethos that encourage open innovation.&rdquo; On the other hand, open protocols are the structural foundation of the internet we are familiar with today. The idea behind these protocols is that the protocol wouldn&rsquo;t change and would provide for a steadier process when it comes to understanding how the software infrastructure operates. Introducing Tokens Into a New Generation. Tokens didn&rsquo;t exist in prior generations, allowing for a direct financial incentive for community members to develop and govern their networks appropriately. &ldquo;It&rsquo;s the glue that binds the members in the community and provides incentives for all market participants,&rdquo; said Kupor. &ldquo;Understandably so, it creates a whole new set of challenges for regulators, consistent with recent statements from the SEC.&rdquo; Kupor ended proposing that a framework needs to be developed that requires a risk taking but, at the same time, provides for clarity and certainty to market participants, which results in market integrity...

Yesterday, Congress addressed in two full hearings why it’s time to start taking a closer look at why and how digital assets, including cryptocurrencies, are impacting U.S. marketplaces.

A Basic Guide to the Digital Age: Breaking Down Congress’ Crypto Hearing –

A Basic Guide to the Digital Age: Breaking Down Congress’ Crypto Hearing

https://bitcoinmagazine.com/articles/basic-guide-digital-age-breaking-down-congress-crypto-hearing

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A Basic Guide to the Digital Age: Breaking Down Congress’ Crypto Hearing - bitcoinmagazine.com