Crypto regulations and legislation remain divided in the US
While Wyoming is being cheered for friendly crypto regulations, Illinois is driving away any chance for crypto innovation.
Illinois Senate Bill 1887 was introduced on February 9. The Digital Property Protection and Law Enforcement Act in the state includes digital transactions and execution of smart contracts. It notes “provisions for the protection of digital property and contract rights, security interests and process management.”
Illinois and Wyoming Crypto Regulation Bills are Polish
While the bill is still pending in the Senate Appropriations Committee, some have identified the flaws. Drew Hinkes, partner at K&L Gates and assistant professor at NYU School of Law, called the crypto bill a “mess.”
He said: “This is an amazing reversal of course for a state that used to be pro-innovation. Instead we now get possibly the most useless state law related to #crypto and #blockchain I have ever seen. A shocking turn of events for the #tech community in #illinois.”
However, he applauded the goal of safeguarding consumers. But he criticizes the method of doing so. He explained, “the way it seeks to protect consumers is to require node operators, miners and validators to do impossible things, or things that create for themselves new criminal and civil liability with fines/fees.”
According to Hinkes, the law would enable a court to order any acceptable blockchain transaction for digital property or execution of a smart contract. It would mandate a blockchain network upon receipt of an order from the attorney general or the attorney general, according to the professional. He stressed: “A court can order a blockchain transaction as a remedy for a lost private key if the owner loses the key or is dead and the key is unknown to the administrator, or order a blockchain transaction to reimburse a victim in the event of fraud/error.”
The crypto bill in Illinois contrasts with what was passed in the state of Wyoming. The region passed a law prohibiting the forced production of a private key that safeguards other state rights and interests, including digital identities. However, Illinois allows a court to compel a blockchain transaction in response to a “valid request.” Hinkes noted that a secured party would not require a private key in this case.
The US is struggling to find a sweet spot
By enforcing strict rules, the Securities and Exchange Commission (SEC) in the United States is cracking down on web3 companies. Nonetheless, enforcement is happening as crypto bills remain pending in Congress.
Recently, the agency imposed a $30 million penalty on Kraken and ruled that the stake reward facility must be shut down. The SEC also warned Paxos of potential legal action for violations of the Securities Act.
Jake Chervinsky, Chief Policy Officer of the Blockchain Association, believes the crypto action is an “overcorrection”.
While the executive believes this is not the end of crypto in the US, the damage could be real. He opined: “The agencies are causing real harm to some parts of the crypto space, primarily to US firms that want a path to compliance and US investors that want access to crypto products and services.”
Disclaimer
BeInCrypto has reached out to the company or person involved in the story for an official statement on the latest development, but has yet to hear back.
