Texas Lawmaker Proposes Banning Anonymous Cryptocurrency Transactions

  • Phil Stephenson, a Republican member of the Texas House of Representatives, has suggested banning anonymous crypto transactions.
  • Anonymous crypto transactions pose risks such as people using them to engage in illicit activities, the bill noted.

Phil Stephenson, a Republican member of the Texas House of Representatives, has submitted a bill that would require residents of the US state to provide identity verification information before conducting cryptocurrency transactions.

Referred to as H.B. No. 4371, the bill states that individuals who are sending and receiving cryptocurrencies must make their identities known - prior to engaging in such transactions.

The bill also notes that people who are using a “verified identity” cryptocurrency need not supply identity verification documents before conducting transactions.

Notably, Texas could become the first US state to prohibit the anonymous use of cryptocurrencies should Stephenson’s bill be approved. As mentioned in H.B. No. 4371, the bill will take effect on September 1st, 2019 - if it’s approved and becomes law.

Individuals Engaging In Crypto Transactions Must Make Their Identities Known

Stephenson, a certified public accountant (CPA), has noted in section 662.02 of the bill that before accepting a payment in cryptocurrency, the recipient of the transfer must verify the identity of the person sending them the funds. However, the bill proposed by Stephenson clarifies that individuals are “not required to verify the identity of a person sending payment if the payment is sent by a verified identity [crypto]currency.”

H.B. No. 4371 also states that the relevant agencies mentioned will be required to provide users with the appropriate tools so that they are able to distinguish between an anonymous crypto transaction and one where the users have made their identities known. Commenting on the bill H.B. No. 4371, Andrew Hinkes, the co-founder and general counsel at Athena Blockchain, remarked (via Twitter): 

Congratulations Texas, you’re the first state to formally attack and attempt to ban anonymous use of cryptocurrency in the US.

Hinkes further noted: “Other questions: Would any existing cryptocurrency or digital currency qualify as a ‘verified identity digital currency’ as defined? What level of ‘ID’ is required to be ‘verified’? State issued? Are four state administrative bodies the right entities to ‘promote’ a digital currency?”

Last week, several members of France’s National Assembly had been discussing the potential prohibition of certain privacy-oriented cryptocurrencies including monero (XMR), zcash (ZEC), PIVX, and DeepOnion. French lawmakers have published a 150 page document titled “Virtual Monies” - which they presented recently to the nation’s lower house of parliament.

Banning Privacy-Oriented Cryptocurrencies In France

The report’s authors, Éric Woerth and Pierre Person, have provided basic explanations of how blockchain technology works and how the Bitcoin protocol was initially proposed through the Bitcoin whitepaper by its pseudonymous creator, Satoshi Nakamoto.

Additionally, the report highlights what may be considered inherent risks associated with using anonymous cryptocurrencies such as being able to use them to carry out illicit activities including money laundering and financing drug and human trafficking.