An untitled bill before the Texas legislature is just ridiculous.
House Bill 4371, which is less than 500 words long, calls for people to “verify” the identity of senders before receiving cryptocurrency. The bill also introduces to Texas law a difference between “verified” digital currencies and non-verified ones. It specifically seeks to “promote the use of verified identity digital currencies,” though it gives no name to such.
Are they talking about Ripple? We don’t know. Anyone can get hold of XRP and own a Ripple account. Ripple just has the means to identify the senders and receivers of XRP.
Cryptocurrency is not a bank account. It’s more of a bearer asset. You prove ownership by holding and using it. “Verified identity digital currencies” are few and far between. The bill is putting higher demands on cryptocurrency than other digital forms of payment. When you pay at the store with a credit card, you normally don’t have to present ID. The cashier typically assumes you’re the cardholder. If you commit fraud, that’s on you. Demanding identification for a card purchase actually violates the terms and conditions of the card issuers.
But really, this just isn’t how crypto works. Forget about receiving anonymous crypto donations if you’re in the State of Texas and this bill passes.
You put a Bitcoin address on Twitter, anyone can send BTC. Same with every other type of address, including XRP.
In fact, if you put a PayPal e-mail address up, people can send money that way. PayPal handles the KYC in that case. However, cryptocurrency users are being required to do the job that banks and financial institutions do. For what reason? To promote the use of verified identified digital currencies? Or to discourage use of cryptocurrencies at all?
It has to be the latter. The bill smacks of lobbyist influence. The simplicity of it is startling – it doesn’t define the reason for its demands, nor does it talk about the correct way to conduct these KYC checks. But really, why should everyday people have to know who the senders of crypto are?
Businesses already have certain know-your-customer regulations. They keep records when they receive a payment and where they ship an order to. When they sell products only intended for adults, they verify that information too. Also, even would add chapter 662 to the “business and commerce code” of Texas, it specifically says:
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.
The bill’s author, Phil Stephenson, is a certified public accountant. It’s not unreasonable to believe that perhaps one of his former clients has some skin in this game. In the best case, the move would create a market for verified digital currency. In the worst case, it will have a serious cooling effect on Texas and cryptocurrency.
Stephenson represents just over 100,000 people. He either thinks this bill will somehow benefit them – by making it much harder to receive next-generation money – or he’s not thinking about them at all. If you make a sale on Craigslist via cash, you don’t have to ask the buyer for ID. Why should it be any different for cryptocurrency?
Stephenson is a member of the Texas Republican Party, but this is decidedly non-conservative legislation. It’s an example of government overreach that, if passed, will almost certainly damage a very nascent industry.
If you live in Texas legislative district 85 – parts of Fort Bend, all of Wharton or Jackson – please reach out to your representative immediately. Regulations and laws have a way of replicating themselves in other jurisdictions, especially when they’re engineered by large interests such as banks and payment processors.
If they can pull it off in Texas, they can probably do it in most other states. If you live in any other part of Texas, also contact your representative. Explain to them the onerous nature of this bill and why it’s a violation of your rights as a Texan.
Last modified: January 10, 2020 7:08 PM UTC