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House passes cryptocurrency, insider trading bills

Measures were delayed by debate over spending proposals

Bitcoin and other cryptocurrencies are legally considered commodities and occupy the same category as gold or oil, which are considered “exempt.” (Dan Kitwood/Getty Images file photo)
Bitcoin and other cryptocurrencies are legally considered commodities and occupy the same category as gold or oil, which are considered “exempt.” (Dan Kitwood/Getty Images file photo)

After a week of shutdown-related delays, the House has passed three financial services bills that had been expected to receive floor votes early last week, but were delayed as the House debated spending proposals.

Lawmakers agreed by voice vote Monday to pass under suspension of the rules a bill  co-sponsored by Reps. Ted Budd, a North Carolina Republican, and Stephen F. Lynch, a Massachusetts Democrat, that would create an interagency task force led by the Treasury secretary to research how new financial technology, or fintech, is being used in financial crimes and terrorism, and develop regulatory and legislative responses. The bill would also establish a grant fund for programs and ideas for preventing terrorists and other bad actors from using cryptocurrencies for nefarious ends.

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“Illicit financial networks are the linchpin of any terrorist group, criminal organization or rogue state’s operations. And as we move into an increasing digital and virtual world, criminals and terrorists will start to use new technologies that are available to them,” Budd said. “In my view, industry and the federal government should be coming together to find best practices and solutions to stop this new terrorist threat.”

The House also voted 412-3 to suspend the rules and pass another fintech bill that would direct the Government Accountability Office’s comptroller general to research how cryptocurrencies and online marketplaces can facilitate sex and drug trafficking. The ability to move money across the globe quickly and anonymously using cryptocurrencies makes the technology attractive to criminals, said Democratic Rep. Juan C. Vargas of California, the bill’s sponsor.

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“If we are to craft effective regulatory and legislative solutions to combat these transnational criminal organizations, we need to fully study and analyze how virtual currencies and online marketplaces are used to facilitate sex and drug trafficking, to determine how best to eliminate their use,” Vargas said from the House floor.

Frustrated by the negative publicity generated by the crimes linked to cryptocurrencies, fintech industry officials welcomed the legislative proposals.

“We’re pleased Congress continues to take a serious look at these issues,” Kristin Smith, director of external affairs at the Blockchain Association, said last week.  

The two fintech bills were introduced last year and passed the House with broad, bipartisan support, but then stalled in the Senate.  

A third bill, directing the Securities and Exchange Commission to study narrowing a safe harbor for corporate insiders trading stock pursuant to pre-determined plans, passed by a 413-3 vote under suspension of the rules. The bill was co-sponsored by Financial Services Chairwoman Maxine Waters and ranking member Patrick T. McHenry.

Suspension of the rules is a process that limits debate, bars amendments and requires a two-thirds majority of those present and voting for passage of legislation.

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