Lawmakers in Missouri have introduced a bill designed to protect the use of Bitcoin and several other cryptocurrencies. The bill, initiated by Rep. Phil Christofanelli on December 27, seeks to guarantee users’ rights to partake in crypto activities, including transacting, staking, mining, and self-custody. Nebraska also passed similar legislation, introduced by Sen. Eliot Bostar.
Benefits of the Blockchain Basic Act in US States
The bill, if passed, would be considerably beneficial to the crypto industry in Missouri and other states that give their assent. For instance, users in these states will freely complete transactions, such as paying for goods and services or investing in crypto, without restrictions. Furthermore, there will be no state capital gains taxes for all crypto transactions less than $200.
Freedom with mining and self-custody, as well as the elimination of Bitcoin state capital gains taxes, and the amendment of damaging regulations, are all factors that could lead to an increase in crypto adoption. While crypto is already quite noteworthy across industries like finance and commerce, other sectors like entertainment are also set to benefit. For instance, Cameron Dhaliwal writes that Missouri does not regulate online casinos. This means resident players must visit offshore sites to play casino games in Missouri. However, with supportive legislation, the state could welcome online casinos, especially those that support cryptocurrency wagers. Via digital assets, players would find it easier to gamble offshore because geographical regulations restricting cross-border transactions are only a fiat problem. In addition, crypto casinos use models like Provably Fair Gaming, which ensures fairness in gambling, confirming to players that the outcomes of games are accurate and without interference. Provably Fair Gaming is a casino model exclusive to the crypto and blockchain sector.
In addition to the above, crypto miners will have the right to conduct their mining activities without typical restrictions. If passed, the bill will allow projects and organizations interested in mining to conduct their activities freely, even in residential locations, without special licenses. Where there are no licenses, the number of miners will likely increase. The Blockchain Basics Act policy document specifically provides for “home digital asset mining” provided the miner complies with local ordinances.
There are several benefits of many miners participating in a network. Firstly, these miners significantly contribute to security and decentralization. The existence of a large number of miners reduces the risk of a takeover by a single entity or group. In other words, the more the miners on a network, the less the risk of a 51% attack.
There is also network stability, which is a direct advantage of encouraging participation from multiple miners. Generally, disruptions and breaches are more likely on networks with only a small number of participants, which means that networks are likely to be stable where miners are in abundance. Furthermore, more miners means stronger decentralization. A blockchain network’s resistance to censorship significantly increases when network activities are widely distributed. All of the above are only a few advantages that states will enjoy from passing the Blockchain Basic Act.
The Blockchain Basics Act is part of efforts spearheaded by crypto non-profit organization Satoshi Action Fund. According to the Fund’s page on the act, the aim is simply to protect digital assets by fostering and developing their use and function.
An executive summary of the Blockchain Basics Act, in addition to protecting monetary freedom, includes preventing outdated regulations from stifling innovation. The Satoshi Action Fund believes that the Federal Government has been unfair to the crypto and blockchain sector by enforcing decades-old rules that were not created with blockchain in mind. This considerably stifles innovation and makes monetary freedom difficult. The Fund seeks to solve this problem by “[exempting] notable blockchain activities from traditional financial regulations which they cannot possibly comply with while keeping consumer safety in mind.”
The general idea of the Blockchain Basics Act is to ensure that cryptocurrency usage and adoption grow significantly in all states that pass the bill. As a way to prevent the possibility of regulatory problems in the future, the policy document specifies that businesses helping to facilitate crypto mining or staking services will not be considered as offering investment contracts or securities. In addition, people engaging in crypto mining or operating nodes on blockchain networks will not be liable for any transaction they merely validate.
The Satoshi Action Fund chief executive officer (CEO) and co-founder, Dennis Porter, called for public support in an X post. Porter wrote that the plan for 2024 is to introduce at least 13 bills in 13 states, and sought public contribution when lawmakers hold a hearing for public input. According to Porter, members can register to provide a written or verbal testimony to support the bill. Porter says that passing the bill in Missouri, although an “uphill battle,” is not impossible.
In a different post, Porter likens the Fund’s efforts at supportive Bitcoin regulations to the fight for Cannabis legislation. The CEO pointed out that the fight did not happen at the federal level. Instead, it happened at the state level and gradually became successful until 75% of US states legalized marijuana. Porter specifically wrote, “While Satoshi Action Fund is working to change the narrative on Capitol Hill, this battle will not be won in Washington, DC but rather the states.”
Crypto Legislation in the US
The laws regulating the cryptocurrency industry in the US vary between states. While some states are notorious for their aversion to crypto, or in some cases their indifference, other states are more open. For instance, Texas is one of the most crypto-friendly states, with various advantageous tax concessions. Also, Texas is a haven for miners because the state has affordable electricity, in addition to special deals crypto miners can access. On the other hand, New York has some of the most challenging cryptocurrency laws in the US. One major pain point is the BitLicense crypto exchanges need to obtain from the New York State Department of Financial Services (NYSDFS). Unfortunately, the process of obtaining this license is complicated and expensive.
At the federal level, there is no robust regulation for cryptocurrencies and blockchain. However, recent updates suggest a possible focus on crypto regulation this year. Recently, the United States Securities and Exchange Commission (SEC) approved 11 spot Bitcoin exchange-traded funds (ETFs), after denying applications for over a decade.