The "Consumer Safety Technology Act” (H.R. 3723), sponsored by Rep. Jerry McNerney (D-CA), recently passed the House. The final vote tally was 325-103.
The Act would require the Secretary of Commerce, in conjunction with the Federal Trade Commission (FTC), to study and report on the use of blockchain technology and digital tokens and the potential benefits of blockchain technology for limiting fraud and other unfair and deceptive acts and practices, including:
- trends in the commercial use of and investment in blockchain technology;
- best practices in facilitating public-private partnerships in blockchain technology;
- potential benefits and risks of blockchain technology for consumer protection;
- how blockchain technology can be used by industry and consumers to reduce fraud and increase the security of commercial transactions;
- areas in Federal regulation of blockchain technology that greater clarity would encourage domestic innovation; and
- any other relevant observations or recommendations related to blockchain technology and consumer protection.
If enacted into law, the Act would also require the FTC, within one year after enactment, to issue a public report on:
- any actions taken by the FTC relating to unfair or deceptive acts or practices in transactions relating to digital tokens;
- the FTC’s other efforts to prevent unfair or deceptive acts or practices relating to digital tokens; and
- any recommendations by the FTC for legislation that would improve the ability of the FTC and other relevant Federal agencies—
- to further protect consumers from unfair or deceptive acts or practices in the digital token marketplace; and
- to promote competition and promote innovation in the global digital token sector.
As this bill moves to the Senate, it should serve as an important reminder that as blockchain technology and digital tokens become ubiquitous in the industry, greater regulatory attention is likely to follow.