Bill Overview
Title: Crypto Exchange Disclosure Act
Description: This bill requires cryptocurrency exchanges that hold customer assets to periodically disclose proof of reserves to the Securities and Exchange Commission. This includes the amount of assets held by the exchange compared to the liabilities of the exchange.
Sponsors: Rep. Torres, Ritchie [D-NY-15]
Target Audience
Population: Individuals using cryptocurrency exchanges
Estimated Size: 40000000
- Cryptocurrency exchanges globally will need to comply with new reporting requirements, impacting their operations.
- Customers of these exchanges, both private and institutional investors, will gain more transparency about the financial health of the exchanges holding their assets.
- Regulatory bodies will have increased oversight of cryptocurrency markets, potentially influencing market stability and investor confidence.
- Developers and companies involved in the infrastructure of these exchanges might need to update systems to comply with new reporting standards.
Reasoning
- Consideration is given to a diverse set of stakeholders within the U.S. cryptocurrency exchange market, which includes individual investors, institutional investors, exchange operators, and people indirectly involved such as software developers and compliance officers.
- The policy primarily affects individuals engaged in significant cryptocurrency transactions and those who have vested interests in the transparency and reliability of their chosen exchanges.
- The budgetary constraints imply that only a fraction of exchanges, likely those that are most prominent, will be subject to initial monitoring, thus not all individual experiences will be equally impacted immediately.
- The goal of the policy is to enhance market stability and increase investor confidence. As such, the expected increase in transparency can have varying degrees of perceived value and well-being impact across different types of investors.
- Given the American target estimation of 40 million affected individuals, the hypothetical interviews touch upon some of the various outcomes and opinions.
Simulated Interviews
Software Developer (San Francisco, CA)
Age: 30 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- I believe this new policy is a good step toward assurance for our users.
- It might mean more work on my end to implement the necessary reporting tools, but I see it as crucial for transparency.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 8 | 6 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 5 |
Institutional Investor (New York, NY)
Age: 45 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- The policy should help in better assessing the risk associated with investing in various exchanges.
- This level of transparency was much needed in the crypto space; it should help stabilize it.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 7 | 4 |
| Year 5 | 8 | 4 |
| Year 10 | 9 | 3 |
| Year 20 | 9 | 3 |
Cryptocurrency Trader (Austin, TX)
Age: 28 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 3.0 years
Commonness: 7/20
Statement of Opinion:
- I'm cautiously optimistic about the policy; initially, it might slow down transactions if compliance creates a bottleneck.
- Long-term I hope it assures the stability of my assets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 4 |
Compliance Officer (Miami, FL)
Age: 37 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 9/20
Statement of Opinion:
- The task of compliance has grown enormous; however, the policy should ensure our long-term stability and credibility.
- We may face costs in the short term for compliance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Independent Financial Advisor (Chicago, IL)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- Greater transparency means less speculation and improved advising for my clients.
- While it may create regulatory bloat at first, in the end, it's beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 4 |
College Student (Seattle, WA)
Age: 22 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 1.0 years
Commonness: 15/20
Statement of Opinion:
- The policy sounds good for keeping exchanges honest.
- For someone like me, transparency is valuable but I'm just a small player.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 6 | 5 |
Tech Entrepreneur (Los Angeles, CA)
Age: 40 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 12/20
Statement of Opinion:
- Though the policy brings transparency, it could increase operational costs for companies like mine that deal with exchanges.
- We'll need to adapt but it's a necessary process.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 8 | 5 |
Retiree (Atlanta, GA)
Age: 60 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- The policy may stabilize the market, which is beneficial for my investments.
- I'm glad to see regulations catching up with the crypto market.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 6 | 4 |
Freelance Journalist (Portland, OR)
Age: 33 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 3.0 years
Commonness: 11/20
Statement of Opinion:
- This policy offers substantial content potential for market analysis and reporting.
- While it may complicate some aspects of reporting until everything settles, it generally seems beneficial.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Digital Artist (Denver, CO)
Age: 25 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 14/20
Statement of Opinion:
- It's reassuring to know exchanges have to prove they hold what they say.
- I haven't had any issues, but I'll feel safer as regulations require transparency.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $40000000 (Low: $35000000, High: $45000000)
Year 2: $42000000 (Low: $37000000, High: $47000000)
Year 3: $44000000 (Low: $39000000, High: $49000000)
Year 5: $48000000 (Low: $42000000, High: $54000000)
Year 10: $58000000 (Low: $50000000, High: $66000000)
Year 100: $148000000 (Low: $127000000, High: $169000000)
Key Considerations
- The pace at which exchanges can adapt to and implement the required disclosure practices will influence costs.
- The potential for unintended market disruptions as participants adapt to new regulatory requirements.
- Uncertainty in how international exchanges interacting with U.S. customers will adapt and comply.