The Boston Blockchain Association (BBA) has partnered with the Chamber of Digital Commerce, the world’s leading trade association for the digital asset and blockchain industry, to release a Massachusetts Edition of the Legislator’s Toolkit for Blockchain Technology, to guide Massachusetts lawmakers in creating a favorable regulatory environment for the Commonwealth.
In our mission to build Massachusetts into a global hub for blockchain technology, we make five legislative recommendations in this Toolkit:
- To establish a State Blockchain Working Group. Building upon the vision set forth in SB 200 and HB 126, we recommend establishing a state blockchain working group of 10 to 20 members with a diversity of backgrounds including academia, government, law, cryptocurrency, business/entrepreneurship, and underrepresented communities, to build out the blockchain focused ecosystems across the Commonwealth so that Massachusetts can become a leader in this emerging technology.
- To create a legal/regulatory “sandbox” for blockchain projects. We encourage investment, entrepreneurship, and innovation in the blockchain and cryptocurrency industries within a clearly defined “safe harbor” framework. This framework will allow blockchain projects to be developed for a limited time (say, three years) without falling under securities regulation. At the end of this safe harbor period, projects will be evaluated and appropriate regulations applied.
- To clearly define virtual currencies. Following the lead of other states, we recommend modifying the state’s Uniform Commercial Code defining virtual currency (see Texas HB 4474) as digital representations of value that function as a medium of exchange, unit of account, and/or store of value, often secured using blockchain technology.
- To standardize tax obligations. Currently digital currencies are taxed as capital gains at every transaction, making them impractical to use for everyday purchases. We recommend removing these tax obligations, allowing digital currencies to function more like traditional currencies when they are used in that manner, yet still functioning like securities when intended for investment purposes. (You shouldn’t pay capital gains tax when you buy a cup of coffee with bitcoin.)
- To develop a blockchain “pilot project.” We recommend investment in a blockchain project that will benefit the Commonwealth. Potential blockchain projects include municipal bonds to raise funds while improving civic engagement, an identity management system to provide citizens access to government services, an innovation center hub to support blockchain development, a crypto savings solution for the unbanked and underbanked, and improving the security and anonymity of blockchain based voting.
The BBA wishes to extend its thanks to Evan Karnoupakis, who led the development of the Massachusetts Toolkit. Evan learned about the Legislator’s Toolkit when researching Blockchain Success Stories, the book he co-authored with BBA Board Member John Hargrave. He envisioned the BBA supporting the document in a manner similar to the Texas Blockchain Council (TBC), who had created a Texas version of the Toolkit.
Evan reached out to TBC Board Chair Natalie Smolenski, who connected Evan with TBC President and Founder Lee Bratcher. Lee shared his insights on co-developing the Texas Edition with the Chamber. Collectively, these organizations are all working to grow the blockchain ecosystem, making the pie bigger not only for their respective states, but also for the country and industry as a whole.
Massachusetts currently has blockchain legislation in process: Senate Bill 200 and House Bill 126 to establish commissions to study the technology and foster its proliferation, and House Bill 3763 to implement a blockchain-based voting pilot.
With our new Toolkit, we hope that legislators will see these proposals (and many more like them) into law.