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Month: March 2023

Exemption of Vape Liquid with Nicotine from Poisons Act a Positive Sign towards Vape Regulations

KUALA LUMPUR, 30th March 2023 – The Consumer Choice Center (CCC) expresses its
support for the Government in its move to exempt vape liquid with nicotine from the Poisons
Act, adding that this would pave way for vape liquids containing nicotine to be regulated
appropriately instead of being subject to the Poisons Act that is unsuitable for vaping
products.
Malaysian Consumer Choice Center representative, Tarmizi Anuwar says: “The exemption of
vape liquids containing nicotine from the Poisons Act must be complemented with
introduction of laws or amendments to existing laws to enable the products being regulated
in a smart and coherent way. Otherwise, consumers will only continue to access unregulated
products.”
Tarmizi also said that with a smart regulatory framework, vapers will have access to
products that are compliant to standards which is a similar practice in other countries that
have regulations on vape products.
“Malaysian consumers have been accessing unregulated products for many years and a
reform is overdue. It is important to ensure the products adhere to fixed quality and safety
standards to protect consumers. In addition, regulations would also enable efforts to
prevent underage vaping which could be done through smart rules and enforcement of age
restrictions at points of sale as well as use of modern age verification technology for online
sales.”
“Access to regulated vape products also act as an impetus for smokers to switch to less
harmful alternatives. Globally, many countries are seeing a decline in smoking rates due to
vaping and with regulations, more smokers in Malaysia will stop smoking and switch to
vaping products,” said Tarmizi.

On the idea of introducing a Generational End Game (GEG) that was brought into the discussion
by the previous Health Minister, Tarmizi believes that it is difficult to implement in Malaysia
and the Government should establish an independent committee to conduct in-depth studies
as well as assessing the impact before making any decision.

“This is a big decision to be made in the current political and economic climate. In addition,
there are numerous challenges including the problem of an already existing large black
market. Instead of rushing into making this decision, the Government should establish a
comprehensive committee comprising of local and international independent public health
experts, economists, representatives of retail sectors and enforcement agencies to assess
the impact before making a decision. Other countries have been successful in lowering
smoking rates without such a heavy-handed ‘endgame’,” he concluded.

How Argentinians Are Using Crypto To Fight Inflation

As the country’s statistics agency announced, Argentina’s annual inflation rate is now officially in the triple digits, reaching 102.5%, with a 6.6% monthly rise in the Consumer Price Index (CPI), and a 13.1% year-to-date increase. This is the largest inflation recorded in the country since 1991. When inflation is that high, prices can change very quickly, sometimes even on a weekly basis.

Economic instability and high inflation are not new to citizens of Argentina. The country experienced a  ‘Golden Age’ in the late 19th and early 20th century which saw it  industrialize, become one of the world’s leading exporters of wheat, beef, and wool and one of the preferred places for people to immigrate to due to its economy and opportunities. Sadly,the country never completely recovered from the Great Depression of the 1930s. Periods of intense political instability, dictatorships and redistribution of wealth caused numerous economic setbacks. After its return to democracy in the 1980s, the government, led by President Carlos Menem, implemented a series of economic reforms, known as the “Convertibility Plan”, that  aimed to stabilize the economy and reduce inflation. However, the government continued to run large budget deficits and accumulate debt, which together with external shocks further weakened the economy. After inflation rates reached more than 3,000%, one of the highest recorded in history, a series of reforms allowed for it to stabilize. 1991 was the last year Argentina saw triple digit inflation rates until now.

It should not be surprising that many in this country are accustomed to ‘thinking in US dollars’, allowing them to more easily and clearly calculate and understand price signals from the market. It is exactly that sort of economic situation that makes Bitcoin, Ethereum and stablecoins such an important tool for storing value, receiving remittances and partly avoiding inflationary pressures. Many of these concerns are exemplified by the popularity of stablecoins in Argentina. According to the Chainalysis report, almost a third of crypto transaction volume comes from stablecoins. Besides not being subjected to purchase limits (200$ is the maximum amount regular Argentinians can convert to USD a month), stablecoins are pegged to the US dollar, the preferred currency to think about prices in the country. It also helps that cryptocurrencies are digital and not dependent on any local bank in a country where more than one in three unbanked adults cited distrust in the financial system as one of the reasons for not having an account, according to a World Bank report. In a country where more than a third of the population is underbanked or unbanked and internet access is broad, the needs for inflation resistant currency such as Bitcoin, products for financial services allowed by decentralized finance and stablecoins to store value are obvious. 

In a week where the Argentine Peso reached triple figure inflation, it is impossible to overstate the importance of technologies allowing for people from all around the globe to safeguard their funds from political and economic instability. The fact that the citizens of this beautiful country have had the chance to live in periods of hyperinflation, decades of economic instability and uncertainty has also made them more aware of the choices and technology that can help them store their wealth and their paychecks safely. 

Times of hyperinflation are extremely difficult and detrimental to one’s financial well-being and the opportunity to provide for their families. It is a time when black market exchanges bloom, costs of even the most common groceries change weekly and a salary might be worth less in the evening than it was when it landed in your bank account. In such situations, it can be of life importance to be able to store value and receive remittances in a currency that is strong enough to make sure your wealth doesn’t melt away. DeFi, Bitcoin and stablecoins are allowing this to happen and millions of Argentine citizens are benefiting.

Why did the SEC send a Wells notice to Coinbase?

The Securities and Exchange Commission sent a Wells notice to Coinbase yesterday, offering Coinbase to submit information on Coinbase’s listed digital assets, as well as Coinbase Earn, Coinbase Prime and Coinbase Wallet. 

The Wells Notice is named after the Wells Committee, formed in 1972, and named after John Wells who served as SEC advisory committee chair. According to the SEC’s Enforcement Manual, a Wells notice is a communication from the staff to a person involved in an investigation that: (1) informs the person the staff has made a preliminary determination to recommend that the Commission file an action or institute a proceeding against them; (2) identifies the securities law violations that the staff has preliminarily determined to include in the recommendation; and (3) provides notice that the person may make a submission to the Division and the Commission concerning the proposed recommendation. 

In simpler terms, this means that the SEC is notifying Coinbase of upcoming enforcement actions.

Following the announcement of SEC action, Coinbase CEO Brian Armstrong posted a thread explaining the relationship between his company and the regulators and announced the company will contest any enforcement in court. 

In addition, the Chief Legal Officer of Coinbase, Paul Grewal expressed disappointment with the fact that the SEC is considering courts over constructive dialogue. In a separate thread, Grewal explained that Coinbase has met with SEC over 30 times over the past 9 months, sent a petition asking for more regulatory clarity to which it did not receive any response nor any valuable feedback on what to change. 

He goes on to compare a number of other jurisdictions where Coinbase successfully jumped over the regulatory hurdles and became a licensed and regulated crypto business, including Australia, Singapore and Germany. Coinbase has also managed to obtain DCM and DCO licenses from CFTC.

Additional confusion is caused by the fact that the SEC declined to identify which assets offered on Coinbase they deem to be securities. This is concerning as Coinbase claims to have a rigorous review process where more than 90% of tokens asking to be listed end up being declined because they fail to meet the standards and requirements to be traded on the platform. 

When it comes to the staking service Coinbase offers, the company has presented it to the regulators from the SEC in 2019 and two times during 2020 and received no complaints until now. 

A Wells submission regarding the Coinbase Wallet is especially dumbfounding as the wallet is a technological tool rather than a platform or an exchange and it goes to further illustrate the deep misunderstanding of crypto products by the regulators. 

The SEC sending a Wells notice to one of the most compliant crypto companies, together with the past couple of months of actions of Fed, FDIC, and OCC, is another example of the regulatory pressures through enforcement that the current administration is undertaking against law abiding crypto actors in this space. 

A number of coordinated efforts in the past few months have appeared, visible and obvious enough that they are being dubbed Operation Choke Point 2.0. Bank accounts being closed, with no notice and explanation, leading to unbanking of crypto companies together with actions of SEC are another example of the current administration’s attempts to regulate crypto through enforcement.

This and similar examples showcase the aversion that regulators have to crypto companies, users and the sector as a whole. Whilst many industry actors have insisted on regulatory clarity and cooperation, the agencies and regulators have been adding fuel to regulatory uncertainty in the United States. Not only has this been bad for the industry and retail consumers of crypto related products but has been further contributing to the uncertainty that exists in the sector. This approach has been hurtful to the companies, talent and consumers and is going to further drive innovation and jobs to jurisdictions more open and capable of hosting and prospering from this emerging industry. 

As a consumer advocacy group that champions innovative technology and smart policies, the Consumer Choice Center has published its State Model Policy to provide state and local legislators with a template of consumer-friendly policy on Bitcoin, cryptocurrencies, and decentralized finance. 

One in 5 adults in the US owns crypto and having these consumers use services hosted in other countries will make them less safe and more susceptible to many negative externalities that could be avoided by having clear and functional regulation in their home country. 

Only by introducing regulatory clarity, avoiding regulation by enforcement and communication with law abiding companies in the crypto space can the US make sure that businesses and talent are staying in the country rather than fleeing overseas where innovation will be more appreciated. 

Aleksandar Kokotović is the crypto fellow at the Consumer Choice Center.

Ottawa’s Concerning Escalation Against Big Tech Threatens Citizen Engagement

Ottawa, ON – This week Canada’s Heritage Committee moved forward a Liberal motion that will require tech companies like Alphabet (Google) and Meta (Facebook) to hand over their internal and external correspondence in regards to Ottawa’s Bill C-18, which would require these companies for pay publishers when news links are posted on their platform.

In response, the Consumer Choice Center’s Toronto based North American Affairs Manager David Clement stated: “C-18 is a big mistake on the part of Ottawa. Not only does the bill have the relationship between tech platforms and publishers backwards, sharing links on social media generates free ad revenue for publishers through page visits, the Bill now threatens Canadian’s access to news. To make matters worse, Ottawa’s demands for all internal and external correspondence sets a chilling precedent for any NGO, union, trade association or charity that opposes a piece of legislation.

“If Ottawa proceeds in demanding internal and external email correspondence from these companies, it would be a significant step backwards for citizen engagement, which is a key part of Canadian democracy. If this precedent is set, a future government could simply deem any non-governmental opposition to a bill as “subversive” and require the disclosure of private emails. If a major trade union opposed a piece of labour reform, a future government could shake the union down by forcing the union to hand over their internal emails with members, their external emails with legal counsel, their emails with members of the public, and even their correspondence with journalists,” states Clement.

“It would appear as though the Liberal party is failing to anticipate the precedents they are setting today can and will be used by their political opponents tomorrow. A future Conservative government could in theory use this precedent to squash opposition from patient advocacy groups, environmental NGOs, or labour unions. A future NDP government could use this precedent to stifle dissent from business associations, taxpayer advocacy groups, and those who represent the voices of small businesses. This is a clear case of incredible government overreach, one that could fundamentally shift the nature of political engagement in Canada for the worse,” concluded Clement.

***CCC North American Affairs Manager David Clement is available to speak with accredited media on consumer regulations and consumer choice issues. Please send media inquiries to david@consumerchoicecenter.org.***

Banning TikTok is Just the Beginning

The hype around banning TikTok on official government devices shows us that liberal democracies are beginning to take Chinese influence seriously, and the appeasing economic policies of the last two decades are soon to be a thing of the past. Are we late to wake up? Time will tell.

The debate regarding TikTok concerns something other than the app’s quality or what people use it for. It is about how China collects data to achieve an even larger scale. The Chinese Communist Party (CCP) is taking the AI competition seriously. To surpass its competitors, it needs a considerable quantity of data, through which the aggregate of useful information can help make its artificial intelligence more and more successful. One would argue that China has the advantage of having the largest population on Earth, so having a suitable aggregate at home is a plus. It is also clear that government-sponsored mass surveillance has been happening in China for a while. With the help of CCTVs, apps, different consumer tech devices, biometric mapping of citizens, and Internet surveillance, the communist country constantly monitors its citizens. Although the results are probably auspicious, China needs even more data about foreigners to perfect its AI project.

On the other hand, having an app on devices with sensitive information also going through can be dangerous for lawmakers. The apparent cybersecurity threat has forced EU lawmakers to enact new
legislation to ban TikTok on government-issued devices. Similarly, sensitive information can be tracked from the websites of organizations, schools, companies, and basically anything. American researchers showed many companies embed TikTok trackers called pixels on their sites. They studied many sites ending in .edu, .gov, and .org, only to find that most used these trackers without being aware of additional risks. It also entails that TikTok can track you even if you don’t use the app.

In the United States, the issue regarding TikTok was already raised by the Trump administration, but only at the end of 2022 did they finally come up with legislation to ban the app on government devices, plus many schools and states followed the example of the federal government.

Picking up on the American example of model legislation to regulate TikTok, the Consumer Choice Center launched a campaign in January to initiate similar rules and laws in the European Union. Raising awareness was imperative that the people understood the threat behind Chinese influence in Europe. Through different solutions, from a partial ban to complete divestiture of TikTok, the Consumer Choice Center has also looked at other types of Chinese economic influence and the diversity of Chinese tech that influences our everyday lives.

There is still much work to be done if Europeans want to avoid making the same mistake regarding tech dependence on China as they did in the case of Russian gas. Any energy, technology, or economic dependence will entail dire consequences for liberal democracies. As countries like Australia and the UK have already moved forward in restricting and banning other Chinese technologies, the European Union and the member states should consider taking further steps if they don’t want their citizens to be surveilled by a foreign nation.

Food Trade with Europe Should Be a Bipartisan Priority

The Ukraine War presents an opportunity for growing the U.S. farming sector while supporting European allies at a crucial moment through trade.

The United States has the opportunity to upgrade its food exports to increase revenues for farmers, but for that to happen it needs to negotiate a comprehensive trade deal with Europe. For reference, America exports more food to Japan, a market of 125 million consumers, than to the European Union, which holds (with its associated trade partners) 450 million inhabitants. While both the Obama and Trump administrations failed to conclude an agreement with Europe, South American nations are about to conclude a comprehensive agreement.

Following the return of Luiz Inácio Lula da Silva to the Brazilian presidency, the European Union expects to finally conclude its trade deal with the South American common market, Mercosur. It had taken the Europeans two decades of negotiation to reach a political agreement for a free trade deal on food, but the agreement was frozen in 2019, given both Jair Bolsonaro’s unwillingness to reach a compromise on environmental protections in the Amazon as well as French and Irish skepticism on the potential competition by Argentinian beef. With Lula back in office, the deal has a good chance of being approved before the EU elections take place next year.

The time is right for new trade deals with Europe. The old continent experiences a dangerous war in Ukraine that not just threatens the political stability of the region but also re-aligns trade policy away from authoritarian regimes. For too long, Europe’s political leaders have believed that what defines high food standards must be stringent policies on crop protection: phase-out chemicals, reduce livestock, remain skeptical of genetic engineering, and import as little as possible. Now that Ukraine, Europe’s bread basket, is facing a war unprecedented in the twenty-first century, things are changing.

Before February 2022, which marked the beginning of Russia’s aggression, Brussels planned on an ambitious sustainability revamp of its food policy. Now it is confronted with a re-think. Lawmakers have criticized the EU’s planned “Farm to Fork” reform for increasing food prices through reduced productivity. After two years of significant supply chain disruptions during the coronavirus pandemic, it has become clear that even the existing food system lacks resilience, and that the planned reduction in farmland use and livestock capacities will not be beneficial.

This opens the door to a renegotiation of what started in 2012 as the Transatlantic Trade and Investment Partnership (TTIP) agreement. TTIP would have liberalized one-third of global trade and have boosted, according to the European Commission, the European and U.S. economy by over$200 billion in GDP. The deal failed to be adopted on the one hand because of Europe’s skepticism over American food regulation, as well as the hostility by President Donald Trump toward trade agreements negotiated by the Obama administration. Trump’s protectionist policies weren’t just off-putting to Democrats, they should also have repulsed traditionally pro-free trade Republicans.

While the European efforts of tightening the regulatory framework on agriculture look discouraging for future food talks, the White House should instead see the current situation as an opportunity. USDA has suggested a regulatory roadmap, the Agriculture Innovation Agenda, which looks to technological innovation in high-yield farming as a solution to the environmental challenges that face the sector, and there is nothing wrong about both blocs trying to achieve a more sustainable food model at different speeds and with different methods. In fact, food trade would underline to what extent high-yield farming is essential to preserving biodiversity—doing more with less, at better prices for consumers.

There will be hurdles. U.S. Secretary of Agriculture Thomas Vilsack has already had conversations with his European counterparts, in which he explained that the American farm sector does not prescribe to the same level of precautionary regulation as the Europeans. That said, things have changed since the 2010s. Despite there being organizations that still try to scare consumers with American “frankenfood” and farmer groups keen on using protectionism to prevent European consumers from having access to more choices in the supermarket, consumers are now more sensitive than ever to food prices. Food price inflation in the European Union is at a record 18 percent—a situation unlikely to normalize in the coming months.

Even and especially with Republicans controlling the House, growing the U.S farming sector while supporting European allies at a crucial moment through trade should be a bipartisan priority. The Biden administration can do well by the American farm sector by embarking on renewed negotiations with the European Union, setting an example for innovative agriculture, and creating economic opportunities for all.

Originally published here

L’EUROPE MET EN DANGER TOUT LE SECTEUR AGRICOLE

Si le prix de la viande continue d’augmenter, le nombre de végétaliens suivra… par pure contrainte financière !

A l’heure où les capitales européennes sont le théâtre d’importantes manifestations d’agriculteurs, il est temps d’analyser ce qui a provoqué le mécontentement des acteurs du secteur agricole et ce que cela signifie pour l’ensemble de l’industrie.

Au cours de l’été dernier, les agriculteurs néerlandais ont manifesté contre les nouvelles règles environnementales de leur gouvernement. Pendant plusieurs semaines, des milliers d’agriculteurs ont brûlé des bottes de foin et bloqué des routes et des centres de distribution alimentaire afin d’attirer l’attention sur les nouvelles règles de l’UE qui risquent de paralyser le secteur.

Le gouvernement de La Haye tente de suivre les directives de l’UE en réduisant les émissions d’azote dans le pays de 50% d’ici à 2030. Les émissions d’oxyde nitreux et de méthane sont des sous-produits de l’élevage, par exemple lorsque le fumier est déposé. Les Pays-Bas, ainsi que le Danemark, l’Irlande et la région flamande de la Belgique, bénéficiaient d’exemptions concernant les plafonds fixés par l’UE pour le fumier en raison de la faible superficie de leurs terres, mais cette exemption est sur le point de prendre fin pour les agriculteurs néerlandais. Dans la pratique, cela signifie une réduction considérable du nombre d’animaux d’élevage et la faillite de nombreux producteurs laitiers.

Fromages menacés

Même avec la perspective d’un rachat des activités par le gouvernement (ce qui a été proposé), les éleveurs ne sont toujours pas d’accord avec les projets de l’UE. La perspective d’une réduction considérable du nombre d’animaux de ferme mettrait également en péril les produits laitiers traditionnels bien-aimés du pays, tels que les fromages de Gouda et d’Edam. Les protestations des agriculteurs ont entraîné la démission du ministre de l’Agriculture, Henk Staghouwer, en poste depuis moins d’un an, mais le gouvernement reste ferme dans sa décision de suivre les directives de l’UE.

Le 3 mars, les agriculteurs se sont rendus à Bruxelles pour exprimer des préoccupations comparables sur les objectifs de réduction des émissions d’azote. Les organisations agricoles ont déclaré dans un communiqué commun que l’accord sur l’azote, dans sa forme actuelle, « provoquera un carnage socio-économique ». Elles souhaitaient que l’accord reflète mieux les perspectives d’avenir du secteur agricole.

Il s’avère que les nouvelles restrictions concernant les émissions toucheront le secteur agricole encore plus durement qu’on ne le pensait. Les informations obtenues par Euractiv montrent que les plans de l’UE toucheront trois fois plus d’élevages de porcs et de volailles que prévu. Jusqu’à présent, l’UE ne comptait que sur une fraction de l’élevage pour appliquer ses règles, mais cela est sur le point de changer. Bien que certains États membres de l’UE fassent pression, il est probable que les restrictions prévues seront mises en œuvre, ce qui causera des dégâts dans un secteur agricole qui a beaucoup souffert de la directive Covid-19 et de la guerre en Ukraine.

De 20 à 53% d’inflation alimentaire

L’Union européenne a dévoilé sa stratégie « Farm to Fork » en mai 2020, au début de la pandémie de Covid-19. Ce plan prévoit une réduction significative des pesticides et des engrais de synthèse, ainsi qu’une augmentation de la production de l’agriculture biologique.

La Commission européenne, l’organe exécutif de l’UE à Bruxelles, dévoile structurellement des paquets législatifs qui font de ces plans une réalité, mais qui se heurtent à des critiques de la part des agriculteurs et des consommateurs. Lorsque l’USDA a réalisé une étude d’impact sur les effets de la stratégie, elle a constaté que les prix agricoles augmenteraient de 20 à 53%. L’UE elle-même n’a pas présenté d’étude d’impact.

Face aux critiques croissantes et à l’inflation générale des prix des denrées alimentaires, le Conseil européen (qui représente les Etats membres de l’UE) retarde à présent la mise en œuvre de la réduction des pesticides, notamment parce que les pays d’Europe centrale et orientale craignent qu’elle n’entraîne une nouvelle hausse des prix des denrées alimentaires.

En septembre dernier, une source du Financial Times affirmait que, « dans des pays comme l’Espagne, une réduction de 50% de l’utilisation des pesticides entraînerait une baisse importante de la production ».

Les protestations des agriculteurs néerlandais ne sont que la partie émergée de l’iceberg de la boîte de Pandore que l’UE a ouverte en s’immisçant dans le système agricole européen. La vision utopique et déformée de l’agriculture véhiculée par l’environnement se heurte aux besoins réels des consommateurs.

Sans innovation, moins de production

En fait, la solution européenne consistant à développer l’agriculture bio va à l’encontre de l’objectif de réduction des émissions de dioxyde de carbone. Les émissions de CO2 augmenteront de 70% si l’agriculture biologique devient la norme, comme l’ont montré des chercheurs britanniques.

La raison en est simple : l’agriculture bio a besoin de plus de ressources et de plus de terres agricoles pour obtenir le même rendement. Les aliments biologiques sont donc non seulement moins bons pour l’environnement, mais aussi plus chers pour les consommateurs.

Quant à l’élevage, c’est la décroissance qui est à l’œuvre. Incapables de concevoir que l’innovation permet de résoudre bon nombre des problèmes de durabilité de notre époque, les gouvernements réduisent les effectifs du secteur alors que tous nos concurrents améliorent les leurs. La mentalité de la décroissance utilise le langage de l’urgence pour réaliser ce qu’elle a toujours voulu réaliser de toute façon : l’abandon progressif de la consommation de produits carnés.

Si le choix de ne pas manger de viande ou de trouver des alternatives à la viande est libre, ce n’est pas à ceux qui s’opposent à la consommation de viande d’opposer leur point de vue aux autres. En outre, l’abandon progressif de l’élevage ne met pas seulement en péril le prix de la viande, mais aussi celui des produits laitiers de toutes sortes.

Nous devrions être végétaliens par choix, et non par contrainte financière.

Originally published here

The Silent March of Bitcoin Policies Across US States

Because it separates state from money, Bitcoin is inherently a political animal.

Bitcoiners may not want to interact with the state, but the state wants to contend with Bitcoin.

And while there is much at stake at the federal level of the US government – the SEC, CFTC, FinCEN, OCC, Congress, presidential executive orders, agency rulings – there has been a silent march through state institutions, resulting in policies (attempted or enacted) affecting Bitcoin and the people and entities that embrace Satoshi’s innovation.

Documenting fully this is an exhaustive exercise, but it is worth understanding how states are dealing with Bitcoin’s rise. These legislative attempts don’t affect the Bitcoin protocol itself, but rather how an individual citizen will be able to interact with Bitcoin, whether sovereignly or otherwise.

Some states have embraced Bitcoin activities as first-movers (Wyoming, Texas, Montana, New Hampshire, etc.) while others have done everything possible to restrict it (New York, Hawaii). Many others are still to be determined.

KEY AREAS

As a crude summary, there are generally three issue areas where regulations touch Bitcoin at the state level: exchange, energy, and taxation.

  1. Exchange concerns fiat on/off ramps for Bitcoin (think cryptocurrency exchanges, brokerage firms, custodians, and ATMs) and has the deepest regulatory scope of each of the issue areas. This is exercised by selective offering of money transmitter licenses, various fees and liquid net worth requirements for selling digital assets, or reporting rules on both buyers and licensed sellers of Bitcoin. Most of the Know-Your-Customer/Anti-Money-Laundering (KYC/AML) rules are adopted with this in mind.
  1. Energy is becoming a more important issue area for Bitcoin regulation, as a number of jurisdictions are either welcoming commercial digital asset mining firms or making it next to impossible for them to operate locally. This has been both restricted but also explicitly protected at both the state level and local level (counties, towns, and cities). This has been done for environmental concerns (real or inflated) or because of perceived load threats to energy grids. As such, it is proof-of-work itself that drives regulators to act.
  1. Taxation has thus far had a light touch at the state level, mostly owing to the federal government’s unclear or simplified classification for Bitcoin as an asset. Whether Bitcoin is actually commodity money, or can be used as a method of payment at all, also falls into this category and is becoming a growing attack vector. 

Save for Nebraska, every state legislature is bicameral with a House and Senate, similar to the federal government. There is the executive branch, run by a governor and his cabinet, and a number of state agencies headed by either career bureaucrats or gubernatorial appointees.

State House Representatives and State Senators have thus far been the primary movers of Bitcoin policy at the state level. Lately, however, agency heads – especially state banking supervisors and state securities regulators – have flexed their muscles.

Rather than a simple ranking, it is best to examine state policy on Bitcoin through the lens of the various licenses, programs, and tangential laws.

And that brings us to the body of state intervention that interacts the most with Bitcoin and cryptocurrencies more broadly: money transmitter licenses.

Money Transmitter Licenses

A money transmitter or transmission license (MTL) is the primary engagement between crypto exchanges and state regulators. For a Bitcoin exchange or brokerage to legally offer services to residents in a given state, it must comply with state laws on how “money transmitting” businesses are regulated.

These license holders must submit information to the state in order to remain compliant, hence firms require Know Your Customer data collection such as your social security number, name, date of birth, and more.

This is separate from the federal Money Service Business license from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which considers money laundering, narcotics, and terrorism funding and usually partners with chain surveillance firms for data retrieval.

State MTLs grant Bitcoin firms the ability to exchange fiat and Bitcoin to customers, and are thus a core part of the regulatory stack for any company that wishes to serve clients.

Recently, when South Dakota and Texas residents were told they could no longer use certain Bitcoin exchanges and brokerages, that stemmed from that Bitcoin firm — or their contracting custodian — losing their money transmission license.

Except for Montana, every state in the union has a procedure requiring registration of entities that offer “money services”: banks, fintech institutions, mortgage companies, money managers, and virtual currency businesses such as exchanges or brokerages.

My organization, the Consumer Choice Center, has drafted a model policy to introduce reciprocity of money transmitter licenses — meaning that if an exchange or firm has one state’s MTL, it should be easily accepted and applicable in another state.

The application process for a money transmission license varies, but often it will usually require a significant amount of liquid assets denominated in US dollars (sometimes up to $5 million) or a surety bond, a debt security held by a third-party in case of future claims by customers on the license holder, which can also range into the millions.

New York state’s BitLicense — the most comprehensive in the country — requires a very high barrier for any firm that deals with cryptocurrencies. Not more than 30 companies have successfully received a BitLicense, and most Bitcoin-only firms have opted to stay out of New York rather than complying with the law, which is a strong enough signal. The bond requirements, net worth stipulations, and various reporting requirements often prove too costly for compliance. Not to be outdone, New Jersey’s version of the BitLicense has thus far sailed through legislative committees, and is expected to pass this session.

These stipulations, depending on the state, mean that an upstart Bitcoin brokerage will need significant cash just to begin legally selling Bitcoin. If an exchange wants to serve customers in all 50 states, it will take significant time and money, lawyer billing hours, and conversations with lawmakers and regulators. It may also require an open review of their operational security and IT.

Ohio and Washington, for example, require third-party audits of computer systems and custodial services if firms deal with virtual currency.

While that may seem rather stringent, some states have decided to sidestep this requirement for digital currency businesses that only buy and sell Bitcoin directly to customers.

The states of Indiana, Kansas, Massachusetts, New Hampshire, Pennsylvania, Rhode Island, Texas, and Utah have independently determined that fiat to Bitcoin (or cryptocurrency) exchange between two parties (company and customer) do not meet the standard for money transmission, and therefore do not require licenses. The same for purely peer-to-peer Bitcoin transactions. Tennessee only requires a money license if an exchange also allows you to sell your Bitcoin.

If you’re a resident of any of these states — plus the aforementioned Montana — you’ve likely had easy access to most Bitcoin exchanges and services.

The rationale for this determination depends on the state. Either they do not qualify Bitcoin as “money” — and thus there is no need to offer a money transmitter license — or they do not consider virtual currency on/off ramps between two entities as “transmission” of money. These definitions, however, are slowly changing due to the influence of a few organizations.

Conference of State Bank Supervisors

In recent years, efforts by state banking supervisors (the principal bank regulators in each state) have aimed to unify the application process of money transmission licenses, namely through the Nationwide Multi-State Licensing System and Registry (NMLS). 

This website serves as the primary application portal for virtual exchanges and brokerages wishing to offer services to customers in multiple states (as well as mortgage dealers). The Multistate MSB Licensing Agreement Program now comprises 31 out of 50 states, giving any applicant a simplified application procedure that is determined by the NMLS governing board.

While it is up to each state’s banking supervisor to review these applications and grant them, the NMLS is the official entry point and communication portal for Bitcoin companies in these 31 states wishing to apply for a money transmission license. 

What makes this application process unique is that NMLS is not a government agency or institution held accountable in any democratic fashion. This registry is technically run by the Conference of State Bank Supervisors, a $120 million nonprofit organization governed by a rotating set of state banking supervisors. 

While the CSBS is nominally a leadership and training organization for banking supervisors and their staff, it has in recent years taken a lead role in crafting model policy to further “regulate and unify” exchange of Bitcoin and other cryptocurrencies through money transmission licenses. Its first model legislation on Bitcoin was proposed back in 2014.

Its latest attempt is the Model Money Transmission Modernization Act. This bill aims to simplify money transmitter legislation in any state that adopts it, establishing rules on the information to be collected, the rights of customers if they are defrauded, and various definitions on so-called “virtual currencies”. It also specifically exempts node runners and noncustodial services. It is fairly boilerplate.

Where some take issue with the model bill — and the various versions that have been introduced or adopted — is that it takes great pains to claim decentralized virtual currency as “not money” (Section 13.03 (b)(9)). Previous versions of this bill defined “money” to also represent legal tender in foreign countries, but considering El Salvador’s embrace of Bitcoin as legal tender in 2021, this was amended.

The more problematic aspect of this scenario — and one we see all too often in lobbying — is that state banking supervisors are supposed to follow the law and policies written by state legislatures rather than crafting the legislation themselves. That conflict of interest is very clear, and should be made apparent in states where these bills are introduced.

For all intents and purposes, the state banking supervisors do not yet want to consider Bitcoin as legal tender in the banking system. They will have to follow rather than lead.

Uniform Law Commission

Another nonprofit organization with significant sway in the realm of Bitcoin policy at the state level is the Uniform Law Commission, a 130-year-old organization that drafts model legislation to harmonize commercial state law. It is led by appointees from each US state and territory who must be licensed attorneys and counts thousands of lawyers as members.

The ULC partners with the American Law Institute to publish the Uniform Commercial Code, a comprehensive set of policies intended to offer each state a package of universal commercial rules to police business activity.

The latest amendment to the UCC, known as Article 12, is solely dedicated to virtual currencies such as Bitcoin and its crypto offspring. The UCC defines these as  “controllable electronic records” — or CERs. 

The bill section delves deeply into Bitcoin terminology — UTXOs, multisig, self-custody, custodians, etc. It makes clear that CERs — including Bitcoin — may be  a medium exchange but are not “money” per US law.

“Money” means a medium of exchange that is currently authorized or adopted by a domestic or foreign government. The term includes a monetary unit of account established by an intergovernmental organization, or pursuant to an agreement between two or more countries. The term does not include an electronic record that is a medium of exchange recorded and transferable in a system that existed and operated for the medium of exchange before the medium of exchange was authorized or adopted by the government.

What this model language means, therefore, is that Bitcoin may be many things, but it is not money. It should still be, however, subject to money transmission licensing requirements.

Since January 1, 2023, 22 states have already introduced a version of Article 12 of the UCC. None have yet passed it.

If these bills make it into law, it is uncertain how it would affect Bitcoin and those who use it, but it likely wouldn’t be anything drastic. 

Unlike previous commentary, these bills would not lay the groundwork for any type of Central Bank Digital Currency (CBDCs) either, but would rather try to restrict what states consider money going forward. This would open the path to more states opposing CBDCs rather than accepting them. Adoption of CBDCs will be a threat at the federal level, but would take significant time, and effort, to trickle down to state policy.

Regulatory Sandboxes

One more hopeful aspect of Bitcoin-specific legislation at the state level has been the introduction of so-called “regulatory sandboxes”. These programs allow firms — mostly innovative companies — to offer products and services for a set period of time before they’re forced to apply for a formal license.

In states that have passed such measures, such as Utah, Nevada, West Virginia, Wyoming, Florida, and North Carolina, that means Bitcoin-only businesses have ample room to quickly scale innovative solutions for customers.

The Libertas Institute was instrumental in pushing for the first-in-the nation statewide regulatory sandbox in its state of Utah, and they have a great write-up here. The rapid growth of regulatory sandbox programs will aid further adoption of Bitcoin and Bitcoin-adjacent firms for years to come.

‘No Action Letters’

Another positive development that has helped Bitcoin brokerages and firms offer more services are so-called “no action” letters issued by state securities regulators. 

These formal letters recognize a firm’s ability to be “exempt” from additional burden of money transmitter licenses according to established criteria. Usually, this is because the firms are only facilitating direct exchange of fiat for Bitcoin (or vice versa) to the customer, or in purely peer-to-peer transactions.

A good number of these have been issued in states like Arkansas, California, and Idaho and have allowed relative ease for Bitcoin companies to operate there — at least where money transmitter licenses are concerned.  

There is no formal process for obtaining one of these letters, but it is generally understood that a legal representative seeks an opinion from the securities regulator 

However, these letters are just “promises” to not enforce particular laws on firms, meaning any particular policy or law change (or change in administration) could render them null and void.

Proof of Work

The effective ban on Bitcoin mining (hashing) in the state of New York in November 2022 is the most notable, but it won’t be the last for proof-of-work. That law was passed using environmental justifications, requiring onerous reporting standards that any commercial mining firm would be unable to meet or afford.

Other states and localities have also heard concerns about energy grid usage, and some public utilities have entertained discriminatory pricing for commercial miners. Preventing energy pricing nondiscrimination via model policy is a necessary step forward for protecting commercial mining specifically and hashrate more generally.

States such as Rhode Island, Kentucky, Missouri, Montana, Oklahoma, Wyoming and Mississippi have recently adopted various incentives to both protect proof-of-work and to entice Bitcoin miners to move to their states.

Several state-based advocacy organizations have been successful in advancing legislative appeal and model policy for protecting mining, establishing microgrids, tapping orphaned wells, and more, and most of the excitement has been in traditionally red states. These measures will continue to give confidence to commercial mining firms, as well as protecting solo miners.

While various jurisdictions will seek to restrict commercial Bitcoin miners, the healthy balance of states needing both revenue and investment will likely serve as a countermeasure to those efforts. The economic incentives, as well as the larger opportunity for investments and capital, create a more hopeful path forward for proof-of-work in the United States.

Taxation

On taxation, we can see that most states have opted to follow the IRS’ definition of Bitcoin and other virtual currencies as simply “property”. 

Filing for taxes on cryptocurrency transactions focuses more on the Bitcoin-to-fiat conversion than vice versa, meaning that capital gains taxes could apply if there are gains.

Montana, once again, is an exception to these rules, as is Wyoming. Both states exempt digital currencies from taxation and explicitly claim that any digital currency projects or firms won’t be treated as securities.

Thankfully, most states have not issued any other guidance or laws on taxation as of yet, only requiring businesses that receive Bitcoin and other digital assets to report that income in dollar denominations. HODLing without selling remains a tax-free strategy, but that determination is best offered by a tax advisor or attorney in your state.

Model policy that preempts county and local taxation and restrictive regulation, as we have outlined in our Smart Cryptocurrency Policies Act, would also be an interesting way to ensure broad state adoption of good Bitcoin policy.

Friends and Enemies

In my time advocating for consumer-friendly policies on Bitcoin at the federal and state level, as as as in Europe, it has been frustrating to see the hundreds of millions of dollars of “crypto” money spent advancing certain policy goals that would only benefit certain projects or exchanges rather than users of decentralized cryptocurrency protocols, like Bitcoin. 

The millions spent by FTX and Sam Bankman-Fried to gain political influence, specifically with members of the US House and Senate Agriculture and Finance Committees — which respectively oversee the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) — are only the more recent lobbying dollars that come under scrutiny. 

In 2022, over $22 million was spent in the nation’s capital by centralized coin companies, exchanges, crypto industry associations, and blockchain firms — and that only counts spending on lobbying contracts. It does not even consider the hundreds of millions more given to political campaigns, politically-connected foundations, PR agencies, and legal firms fighting various issues in court.

While this is an ordinary process — and one practiced by nearly every highly-regulated industry in the US — the fact remains that much of this has hinged on “classification” of digital assets and who the ensuing regulator would be, rather than how individual consumers and users of token projects or decentralized protocols like Bitcoin could benefit. The same is true at the state level.

On advocacy, we’ve also seen these same centralized coin companies deploy millions to support organizations like Greenpeace, which started a campaign to demand that the Bitcoin network “change the code” to switch from proof-of-work to proof-of-stake because of the carbon footprint of mining firms. 

In all of these instances, the focus has been on elevating particular companies rather than consumers of those companies and consumers more broadly. This is actually where the focus and energy should be. The latter approach, coupled with education by organizations such as the Bitcoin Policy Institute, will end up helping Bitcoin adoption more than any lawsuit or agency letter.

On the other end, organizations such as Greenpeace, the Uniform Laws Commission, the Conference of State Bank Supervisors will use their resources to make Bitcoin adoption more difficult or to change it completely. Luckily, the protocol will continue to stand the test of time.

Conclusion

While various federal institutions bargain for regulatory oversight on Bitcoin and its crypto offspring, many states have led the way on empowering residents interested in owning, holding, and spending Bitcoin. Various regulatory measures, especially money transmitter licenses, do limit one’s ability to acquire Bitcoin from regulated entities, but thus far, greater education among state lawmakers has only led to better rules to allow the Bitcoin industry to grow.

While Bitcoin’s march through state policies is positive so far, there is ample reason to suspect that it could be upended at any time, whether or not the federal government enacts new laws. 

The entrenched interests in state-level lobbying, banking, payment services, and environmental groups will continue to serve as a barrier, and they will likely have some wins, but this will only be achieved at a slow enough pace that will fail to keep up with the innovation and resourcefulness of Bitcoin entrepreneurs. Not to mention the protocol itself.

As states continue to evolve as “laboratories of democracy,” it is clear that those that remain open to the innovations offered by Satohi’s invention will end up better for it. I hope that message will continue to resonate.

Originally published here

Generational Endgame: The government needs to avoid repeated MySejahtera data leaks

KUALA LUMPUR, 6th March 2023 – The Consumer Choice Center (CCC) voiced concerns
over the implementation of the generational endgame and urged the government to drop the
generational endgame from the Tobacco and Smoking Products Control Bill.

According to Tarmizi Anuwar, the Malaysian Consumer Choice Center representative, he
believes that the Minister of Health is hasty in wanting to implement generation endgame
and is not consistent with the statement at the beginning that wants to implement it
incrementally and in stages.

It is even more worrying when the Ministry of Health wants to implement it in the next year,
which is 2024. However, until today it is still not clear what mechanism will be used to
ensure that the implementation process is not misused or pose other risks to consumers.
Recently, the Deputy Health Minister, Lukanisman mentioned that the government intends to
make the MySejahtera application as a national public health management tool or digital
public health super apps.

“If the government uses the MySejahtera application or any similar form of application to
implement the generational endgame, this may bring other risks to consumers such as
breach of information or personal data.”

“This is clear in the Auditor General’s Report 2021 Series 2 has revealed that 3 million
Malaysians’ personal data in the MySejahtera application was downloaded by the super-
admin account between 28 October to 31 October 2021,” he said.
In addition, according to Tarmizi, it is more worrying when the Deputy Health Minister’s
answer in parliament contradicts to the response given by the Ministry of Health to the
National Audit Department.

“The statement of consumer details downloaded by the super admin as part of security
measures against attempts to hack the application is contrary to the response given by the
Ministry of Health to the Auditor General’s Department.”

“In the report, the Ministry of Health’s response clearly states that there is an element of
misuse by the super admin account and a police report has been made.”
“The government needs to be more realistic in drafting and implementing laws so as not to
put consumers’ personal data at risk.”

Commenting further on the implementation of the finishing generation in the Tobacco and
Smoking Products Control Bill, he said, “The government needs to drop the generational
endgame and adopt more practical practices; harm reductions such as the United Kingdom
or the Philippines.

“Instead of a full ban these two countries recognize harm reduction as one of the methods
to reduce smoking in their countries.”

In addition, Tarmizi emphasized that the discussion about fundamental rights or individual
freedom in this matter must take into account various opinions and not just one school of
thoughts. He referred to the statement of Tun Zaki, Former Chief Justice, regarding the
generational endgame can be considered to be discriminatory and violate Article 8 of the
Federal Constitution.

“The law must operate equally on all people in fair conditions for all generations and every
group of society. The law cannot give only one advantage to one generation and deprive it
from another.”

Oklahoma patients deserve competitive and affordable insurance

Dear Members of the Oklahoma House of Representatives,

As a consumer advocacy organization with a vested interest in promoting consumer access and patient choice, we write to you today to urge you to vote YES on HB1694.

This bill would require dental insurance companies to spend a set percentage of their premiums on patient care rather than administrative bloat.

Known as a medical loss ratio, HB1694 would standardize dental health benefit spending ratios that already exist for traditional healthcare insurance. This would give Oklahoma dental patients lower premiums, increase competition among insurers, and reduce overall bureaucracy and administrative costs to pass savings on to consumers.

Similar bills have passed in other states, empowering dental patients, and ensuring that consumers have a vibrant market of choice in dental care and coverage. 

Every patient has suffered the gnawing experience of trying to scrap back healthcare reimbursements. Passing HB1694 would bring equity in how patients across healthcare sectors are treated and have their premiums used, leading to lower costs and better treatments for dental patients.

The fact that dental insurers aren’t subject to the same rules as every other health insurance industry should be enough reason to pass this bill, with the added benefit of how it will make insurance premiums more transparent and competitive.

Unlocking more funds for dental patients would help save families thousands of dollars a year, and grant them more consumer and patient choice. It’s a fix all Oklahomans deserve. On behalf of consumers, we urge you to vote for HB1694.

Thank you,

Yaël Ossowski

Deputy Director

Consumer Choice Center

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