Senators introduce bipartisan bill to regulate crypto assets

Politicians are quickly seizing on US government efforts to study and regulate crypto. Reutersreports Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) have introduced a bill, the Responsible Financial Innovation Act, that would forge a “complete regulatory framework” for cryptocurrency and other digital assets. The measure is meant to protect consumers and fold crypto into existing laws without restricting technical progress.

RIFA would set clearer definitions, such as establishing which assets are commodities or securities. It would also create requirements for stablecoins (cryptocurrencies pegged to another asset, such as conventional money) to minimize risks and enable speeder payments. The Commodity Futures Trading Commission (CFTC) would have the power to regulate digital spot markets, while providers would be subject to disclosure requirements. There would be a “workable” tax structure that would let you buy products with cryptocurrency without having to account for and report income.

The act would also prompt the government to further research digital assets. It would create a “sandbox” where federal and state regulators could work together on experimental launches of financial technology. The CFTC and Securities Exchange Commission would have to develop both security guidance and a self-regulatory organization. Other government agencies and offices would be tasked with studying energy consumption, the benefits (and dangers) of investing retirement savings in crypto and the security concerns around China’s official digital currency.

The bipartisan nature of the bill could increase its chances of surviving a Senate vote. Reuters also points out that the CFTC is considered friendlier to crypto assets than the SEC, That’s potentially useful for winning over regulation-averse politicians worried the SEC might limit crypto’s growth.

A House equivalent has yet to exist, and it’s unlikely that RIFA would reach President Biden’s desk before the current session of Congress ends. It’s likewise unclear just which digital assets are covered, and whether or not NFTs might be affected. We’ve asked for more details. The bill nonetheless represents the strongest effort yet to regulate crypto, and might just serve as a blueprint for future efforts to control and legitimize the blockchain in the US.

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New York State passes a right-to-repair bill

New York has just passed the digital fair repair act (Assembly Bill A7006B), making it one of just a few states in the US to do so. The bill, which was introduced in April 2021, passed the senate on June 1st and passed assembly today. It’s now headed to the governor for signing (or veto), and will take effect a year after it becomes law.

The act, titled “Digital Fair Repair Act,” will require OEMs (original equipment manufacturers) to “make diagnostic and repair information for digital electronic parts and equipment available to independent repair providers and consumers if such parts and repair information are also available to OEM authorized repair providers.” That means companies can no longer dictate where you can bring your devices to get them repaired by limiting the access to components or diagnostic information.

If a part is no longer available to the OEM, it will not need to make the same part available to everyone. For things that require security-related locks or authorizations, the OEM has to, “on fair and reasonable terms,” supply the tools or documentation needed to access or reset such devices “through appropriate secure release systems.”

The amended version of the bill also states that the proposed requirements will apply to “products with a value over ten dollars” and that OEMs or authorized repair providers don’t have to make available any parts, tools or documentation if the intended use is for modification of the products. It also excludes public safety communications equipment and “home appliances with digital electronics embedded within them” from the act. Given the way companies have been trending towards making smart fridges, washing machines and more, this could potentially be an enormous loophole or at the very least exclude a large number of products.

Massachusetts previously passed its own Digital Right to Repair Act, which covered parts or machines containing microprocessors. The state has recently expanded that to include connected automobiles. Meanwhile, the California state Senate introduced its own right to repair bill in February, which appears to have bipartisan support. 

New York passes a bill to limit bitcoin mining

New York lawmakers have passed a bill that would temporarily ban new bitcoin mining operations. Early on Friday, state senators voted 36-27 to pass the legislation. It’s now bound for the desk of Governor Kathy Hochul, who will sign it into law or veto the bill. The law would come into effect immediately after it’s signed.

An attempt to enact similar legislation last year hit a wall when the New York State Senate passed it but Assembly members did not. The latest bill passed the Assembly in April.

The legislation seeks to establish a two-year moratorium on licenses for cryptocurrency mining operations that use power-hungry proof-of-work authentication methods for validating blockchain transactions. Right now, bitcoin and ethereum (the two largest cryptocurrencies) fall under that category, though the latter is shifting to a different setup.

The moratorium only covers mining operations that run on carbon-based power sources. Any that harness entirely renewable energy sources or an alternative to proof of work that requires less power won’t be affected. Existing operations and those already going through a permit renewal process won’t be impacted either.

While the moratorium is in place, New York will carry out a study into the environmental impact of proof-of-work authentication methods, per the bill. As CNBC notes, New York has ambitious climate goals that require the state’s greenhouse gas emissions to be reduced by 85 percent by 2050 under the Climate Leadership and Community Protection Act.

New York became a hotbed for crypto mining operations in part due to its plentiful hydroelectricity, low electricity prices and cooler climate than other areas of the US (which means less energy is needed to cool mining hardware). 

Some mining companies have threatened to leave New York due to regulatory uncertainty and set up shop in more crypto-friendly states. Even so, crypto proponents have suggested that, given New York’s status as a legislative leader, other states could follow suit with similar regulations. 

Meanwhile, the Biden administration is working on a policy regarding bitcoin mining. The White House is looking into the impact of such technology on greenhouse gas emissions.

Texas’s bizarre social media law suspended by Supreme Court

Texas’s HB20 was put on hold Tuesday by the Supreme Court, five-to-four. As is typical for emergency for emergency requests, the majority did not define its reasoning; Justice Alito wrote a six page dissent joined by fellow conservatives Gorsuch and Thomas, while Kagan, a moderate, wrote she would “would deny the application to vacate stay” without signing onto the dissent.

The bill — which has been tied up in court since it was passed by the state’s Congress and signed into law by Governor Greg Abbott last September — targets “censorship” by online platforms, insofar as conservatives have in recent years been wont to conflate any form of content moderation with censorship. It reframes large social platforms as “common carriers” similar to telecom companies, but uses that logic to restrict the ability of platforms to limit the spread of, ban or demonetize content based on “the viewpoint of the user,” whether or not that view is expressed on the platform. 

Unsurprisingly, the content, users and viewpoints the law’s supporters believe are being unfairly targeted hew rightward: as the Texas Tribunereported last year, Governor Abbott said he believed social platforms were working to “silence conservative ideas [and] religious beliefs.” The aggrievement of the interested parties and their desired outcomes weren’t lost on Judge Robert Pitman of West Texas’s District Court, who wrote that “the record in this case confirms that the Legislature intended to target large social media platforms perceived as being biased against conservative views.” 

An emergency application to the Supreme Court to suspend HB20 was filed earlier this month by two tech industry groups — NetChoice and the Computer & Communications Industry Association (CCIA) — after a Fifth Circuit court had lifted an injunction on the law, doing so in a startling 2-1 decision for which no explanation was provided. Netchoice’s members include Airbnb, TikTok, Amazon and Lyft among many other; Apple, Google, eBay, Meta and others count themselves among those associated with CCIA. Counsel for NetChoice at the time told Protocol that the Texas law was “unconstitutional” and would compel “online platforms to host and promote foreign propaganda, pornography, pro-Nazi speech, and spam.”

These same concerns were given new urgency after the Buffalo, New York shooting, in which a gunman with white supremacist beliefs killed 10 people and injured three others in a majority-black neighborhood while live-streaming the carnage. Social media companies worked to remove copies of the footage from their services. Even as they did so, the question remained unsettled as to whether those removals would result in Texas dragging these platforms into court. Confusion as to the law’s application was not limited to interested observers, either: in a Twitter exchange with Techdirt’s Mike Masnick, the sponsor of the bill seemed unsure on how such situations would play out. 

A related law in Florida, using a similar common carrier approach, had most of its major provisions deemed unconstitutional by the 11th Circuit Court of Appeals earlier this month. The question of constitutionality for HB20 will continue to move forward in the Fifth Circuit Court. 

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