U.S. Democrat’s Bill Urges Exchanges to Share Off-Chain Crypto Transactions to Regulators

cryptonews.com:

U.S. Rep. Don Beyer, a Democrat serving the 8th District of Virginia, is pushing a bill that would establish centrally-accessible repositories for off-chain cryptocurrency transaction data.

The bill, dated Sept. 27 – the Off-Chain Digital Commodity Transaction Reporting Act – urges crypto trading platforms to “report all transactions to a repository registered with the Commodity Futures Trading Commission (CFTC).”

Usually, off-chain transactions aren’t written on the blockchain, leaving no network record of the transaction’s financial details. As a result, off-chain solutions might be more vulnerable to hacking and data breaches depending on the specific implementation.

“With the emergence of trading platforms and a desire to increase transaction times and lower costs, thousands of transactions occur “off-chain” each day and are unrecorded on the publicly viewable blockchain,” the legislator said.

The Congressman’s bill is a “common-sense measure” to resolve privacy issues and “restore some transparency and confidence” among users and across the crypto market, said Beyer in a separate statement.

“Unfortunately, internal record keeping among these private entities can vary wildly, and this can leave investors and consumers vulnerable to fraud and manipulation. This bill is a common-sense measure to restore some transparency and confidence to the digital asset market.”

Beyer hopes that pushing off-chain transaction data into repositories where regulators can see would help stop FTX-like collapse.

Each digital asset swap, whether cleared or uncleared, shall be reported to a registered swap data repository, the detailed bill noted. Additionally, sales of digital commodities should be stated to the crypto repository for