As Forbes reported today, the Keeping American Innovation Act (KIAA), originally proposed in 2021, was reintroduced on March 7. Its purpose is to create a friendly regulatory environment for cryptocurrencies by relaxing existing laws related to brokers. The proposed draft report said that the effective date of broker rules would be postponed from the end of this year to December 31, 2025. This is another move that is good for the industry because it gives brokers time to prepare for compliance.
The draft KIAA makes the following updates to the law under the Infrastructure Act passed in 2021. 1. Broker definition: The new bill updates the definition of a broker from “any person who is responsible for providing regular digital asset transfer services on behalf of another person” to “any person who is ready to sell digital assets at the instruction of a client in the ordinary course of trading or business.” The updated definition narrows the scope and apparently only covers commercial cryptocurrency exchanges that execute transactions at the request of clients. 2. Definition of digital assets: The proposed law changes the definition of digital assets from "Except as otherwise specified by the Secretary, the term 'digital asset' means any digital representation of value recorded on a cryptographically secure distributed ledger or any similar technology designated by the Secretary of the Treasury" to "The term 'digital asset' means any digital representation of value recorded on a cryptographically secure distributed ledger." The updated definition narrows the scope again, removing broad phrases such as "any digital representation of value" and "any similar technology designated by the Secretary of the Treasury." 3. Transfer reporting: The Infrastructure Act requires brokers to obtain additional information such as wallet addresses when customers transfer assets from brokers to non-broker locations. The new bill requires brokers to report this data to authorities only if the customer voluntarily provides this information. 4. The KIAA Act requires the Treasury Department to conduct a study with industry stakeholders within 365 days of enactment on "expanding the definition of cash to include digital assets," including the possibility of updating regulations.