One of the key features of Bitcoin is its feature that allows anonymous transactions between two parties without third-party interference. You don’t need a centralized body to approve an anonymous Bitcoin transaction. This makes it appealing to anti-bank members of society as well as unbanked ones. While this feature is advantageous, it also has some disadvantages. It is because of the possible disadvantages of anonymous Bitcoin transactions that Texas Republican Rep. Phil Stephenson has proposed a bill that will ban anonymous transactions.
Anonymous Cryptocurrency Transactions To Be Declared Illegal In Texas?
The Texas House Bill No 4371 is going to bring the regulation of cryptocurrencies to a whole new level. It recognizes blockchain technology as the ideal tool for creating financial aliases. The Representative suggested that law enforcement agents in Texas get educated about digital currencies and encourage new methods of user verification before digital currency transactions can be approved. This would ban the anonymous use of all cryptocurrencies. The issue has been a hot topic on cryptocurrency Twitter. Drew Hinkes said:
“Congratulations #Texas, you’re the first state to formally attack and attempt to ban anonymous use of #cryptocurrency in the US. #Texas HB 4371 would require prior verification of #identity for any transaction paid for via #digital currency, only allow the state to operate with a verified identity digital currency, defined as one where identity if the sender is known prior to the transaction. 1/3 To my knowledge”
If the bill is enforced, anyone who performs anonymous cryptocurrency transaction would answer to the law. The sender and the receiver will both be affected. This way, securities boards, banks, and other central authorities will be able to know which users are verified and which users aren’t. Excerpts of the bill are as follows:
“[Texas] may not use a digital currency that is not a verified identity digital currency — The Texas Department of Banking, Credit Union Commission, Texas Department of Public Safety, and State Securities Board shall collaborate to encourage the use of verified identity digital currencies.”
How Will This Ban Of Anonymous Use Of Cryptocurrencies Affect Bitcoin?
At a glance, having users verify their identity before any cryptocurrency related transaction may seem like a good step in the regulation of cryptocurrencies. However, this is going to defeat the purpose of cryptocurrencies. This is because having all users register their identities on a database before they can perform transactions will make the cryptocurrency industry like a regular banking system. This may lead to more stability in the space as well as promote adoption.
Bitcoin (BTC) Price Today – BTC / USD
The bill may be a good thing in the industry. However, Rep Stephenson didn’t explain how he intends to get the law enforcement agencies to enforce it. The question everyone is asking is how do you convince those in the cryptocurrency space to consciously give up their anonymity. This can be compared to asking people with shady cash holdings to turn it all up to the government. It’s going to be tricky.
On one hand, if people listen, the bill will promote adoption. On the other hand, if people are reluctant to give up their anonymity, this bill might hinder the adoption of cryptocurrencies in Texas. For now, it’s not clear if the bill will be passed into law or not.
What do you think about the ban on anonymous cryptocurrencies? Share your thoughts in the comment section.