Jan 19 – CONCORD — A recent cryptocurrency scandal involving the alleged fraud of Sam Brickman-Fried has prompted New Hampshire lawmakers to take action. A newly released report is urging the state to update laws and regulations regarding the use of Bitcoin and its alternatives.
The 67-page report was produced by a 12-member commission appointed by Gov. Chris Sununu. It includes 12 steps for lawmakers and state agencies to take in order to make the state more attractive for cryptocurrency investments and to better protect the public.
“This report is comprehensive and timely, providing specific recommendations that would establish New Hampshire as a leading jurisdiction for developing robust and effective applications of blockchain technologies, including proposals to clarify current laws and support law enforcement in its efforts to protect New Hampshire consumers and investors,” Sununu said in a statement.
Blockchain technology enables users to perform encrypted transactions.
The commission, chaired by lobbyist and attorney Bill Ardinger, who has considerable experience in tax law and financial law, was in the middle of writing its final report when Bankman-Fried, founder of the major cryptocurrency firm FTX.com, was charged with wire fraud, conspiracy, money laundering, and securities fraud in connection with the downfall of his company.
Prosecutors allege that Bankman-Fried swindled billions of dollars worth of digital currencies from investors and clients and used them to support his affiliated hedge fund, Alameda Research. All charges were dropped on January 3.
The global value of cryptocurrencies dropped from around $3 trillion in November to about $850 billion in 2021, according to the commission. Ardinger wrote in the report’s introduction that “many of the same human foibles that led to the myriad other human speculative boom-bust cycles will turn out to be present at the core of the crypto industry’s current uncertainty.”
Need for Regulation
Ardinger suggests that the magnitude of the purported fraud may have been due to the lack of strong regulation at the state and federal level. “Indeed, certain aspects of these technologies, including some of the aspects that make them potentially useful and important, can also make them particularly effective vehicles for fraud, although that behavior is not unique to these technologies,” he said.
The report claims that the current degree of oversight in New Hampshire with regards to cryptocurrency is “unclear and therefore unsatisfactory.” However, the commission believes this should not be a deterrent from finding the necessary clarification and is actually a ‘call to action’ for lawmakers.
The following are the recommendations of the commission:
—Creation of a “blockchain dispute docket” in the High Court to handle legal disputes over crypto assets’ value.
—Enactment of legislation that allows for transparency and limits liability to autonomous decentralized organizations trading these currencies.
—Making cryptocurrency traders eligible for the tax breaks available to “qualified investment companies” under current law.
—Establishment of a Blockchain Quality Assurance Center at the University of New Hampshire Interoperability Laboratory.
—Improvement of cryptocurrency access within the state by maintaining existing communication infrastructure.
—Improvement of law enforcement training to better protect the public against fraud and scams.
In June, a state law (HB1503) authored by Rep. Keith Ammon, R-New Boston, was put into effect, exempting open-blockchain token sellers from certain securities laws. Sununu also signed an executive order setting up the cryptocurrency review committee, which included Ammon, heads of state agencies, and executives from the financial sector.
klandrigan@unionleader.com
