As per the reports, Phil Stephenson, Texas Representative, has presented House Bill 4371 that will necessitate identification of digital currency users before them making any transaction.
The Bill mandates the person is receiving any cryptocurrency payment to authenticate the sender’s identity before the payment acceptance. However, if the crypto payment is being made in a digital currency that has verified identity, then it is not necessary to perform identity verification of the payment sender. The Bill further states,
“This state may not use a digital currency that is not a verified identity digital currency.”
The move will leave all the digital currencies which utilize high privacy features of masking both the receivers’ and senders’ identity, in the prohibition zone. The Texas bill has not specifically outlined these digital currencies with anonymity features, but tokens such as Grin, Zcash as well as Monero are most likely to be banned, thanks to their privacy-protected transactions.
There are also reports that Litecoin and Ethereum are planning to explore options and protocols which would help them further enhance their privacy features. It is a widely known fact that both of these cryptocurrencies stand at a 4th and 2nd position across the world respectively when it comes to their trading volume.
It is also very much likely that cryptocurrency mixing service which facilitates identity masking will also be banned. The bitcoin tumblers or mixers, for example, enable users to mix their bitcoins with that of the other users’ to hide the trails of the blockchain as well as bitcoin’s true origin.
The Bill also plans to conduct an awareness initiative that will be headed by several entities together. The program aims to educate law enforcement and people about digital currency. Once the bill gets a successful approval, the multiple entities that would be collaborating for this initiative will include Credit Union Commission, The Texas Department of Banking, State Securities Board, and Texas Department of Public Safety.
As per the proposed Bill 4371, the Subsection (a) requires all the listed entities to:
- Offer tools that help people differentiate between a cryptocurrency with verified identity and cryptocurrencies that let people stay anonymous
- Educate the law enforcement entities on cryptocurrencies
- Promote utilization of cryptocurrencies with verified identity
The bill describes cryptocurrency as an e-currency that uses DLT and could be dubbed to the sovereign currency. How all the BTC wallets would be administered in compliance with the House Bill, remains to be seen.
The Bill will be effective from 1st September 2019 if it is sanctioned.