Texas Representative Phil Stephenson has introduced House Bill 4371, which would require crypto users to identify themselves before making transactions.
According to HB-4371,
“Before accepting payment by a digital currency, a person must verify the identity of the person sending payment. A person is not required to verify the identify of a person sending payment if the payment is sent by a verified identity digital currency.”
“This state may not use a digital currency that is not a verified identity digital currency.”
Cryptocurrencies that use privacy features to mask the identity of senders and recipients would be prohibited. Although the bill does not explicitly name cryptocurrencies that anonymize their users, coins such as Monero, Zcash and Grin which use protocols to ensure private transactions would be banned.
Development teams at Ethereum and Litecoin, the second and fourth largest cryptocurrencies in the world by trading volume, are also exploring protocols to enhance privacy features.
Presumably, crypto mixing services that mask identities would also be prohibited. Bitcoin mixers or tumblers allow users to send their BTC to a pool where it is then mixed with BTC belonging to other users, obscuring the blockchain trail and the true origin of the Bitcoin.
HB-4371 outlines an awareness program to be spearheaded by several bodies that will help educate the public and law enforcement about cryptocurrencies.
If the bill is passed, the following bodies will collaborate on the educational effort.
- The Texas Department of Banking
- Credit Union Commission
- Texas Department of Public Safety
- State Securities Board
According to HB-4371,
- “The agencies listed in Subsection (a) shall:
- (1) provide tools for people to distinguish a verified identity digital currency from digital currencies that allow users to remain anonymous;
- (2) educate law enforcement agencies on digital currencies;
- (3) promote the use of verified identity digital currencies.”
HB-4371 defines digital currency as an electronic form of currency using distributed ledger technology that can be denominated to sovereign currency. It remains unclear how millions of Bitcoin wallets will be regulated in accordance with the bill.
If passed, lawmakers expect the act to take effect on September 1, 2019.
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