Cryptocurrency Information Bureau News: CLARITY Act passes House of Representatives! Protects non-custodial wallets and developers. #CLARITYAct #cryptocurrency #bitcoin
Video explanation
What is the new US law, the Clarity Act? Important information for your digital asset wallet!
Hello, this is John from Blockchain Navigator!
Today, as always, I will explain the new legal trend that is the talk of the town in the United States in an easy-to-understand way for beginners. The name "Clarity Act" may sound like a difficult law to understand, but don't worry! This is a very important topic that may affect the future of "digital money" such as Bitcoin (a type of digital money that can be used on the Internet) and how we use it.
What is the Clarity Act?
First of all, the "Clarity Act" is a proposed law that is currently being discussed in the United States. The word "clarity" means "clarity" or "transparency," and as the name suggests, the purpose of the bill seems to be to clarify the rules regarding digital assets.
It contains especially important points for those who use Bitcoin and other cryptocurrencies (which are also digital money or assets) or those who are thinking of using them in the future.
This issue's highlight: Could your "personal wallet" be protected?
The best part about this news is that the Clarity Act I mentioned earlier will move forward to a vote (deciding whether to approve or reject it) in the US Congress (where laws are discussed) without any changes to certain important parts.
The important part is the rules for protecting what is called a "non-custodial wallet."
"Non-custodial wallet" is a bit of a confusing term, isn't it? Don't worry, John will explain it in an easy-to-understand way!
- What is a non-custodial wallet?
This is a cryptocurrency such as Bitcoin,A "digital wallet" that users can directly manage"Custodial" means "management or safekeeping," so "non-custodial" means "not entrusting the management or safekeeping of the property to someone else." - For example…
The one you usually useA real walletImagine this. You don't give the cash to a bank teller or anyone else, you keep it with you, right? It's similar to that feeling. In other words, it's like you have the "key" to your wallet (technically called a "private key"). - In response to this…
For example, if you deposit your digital assets in a cryptocurrency exchange (an online service where you can buy and sell digital assets, like a stock exchange), you can say that it is in a "custodial" state. This is similar to depositing money in a bank and having the bank manage it for you. Think of it like the exchange holds the "keys" to your wallet.
In the Clarity Act,The right to use a "non-custodial wallet"Or something like that.The rights of developers who make walletsThe message includes the message, "Let's make sure to protect these things!"
Why is this important?
- For users:You have the freedom to control your digital assets completely by yourself, without relying on anyone. This is especially in line with the idea of Bitcoin, which values free transactions without censorship (governments restricting information). Another advantage is that if an exchange is hacked or goes bankrupt, you are less likely to be directly affected if you manage it yourself.
- For developers:It will be easier to develop new technologies and useful tools without worrying about excessive regulation. This is very important for promoting innovation (the creation of new technologies and ideas).
What is the relationship between the Bank Secrecy Act and "own wallet"?
One law that often comes up in this story is the American law called the Bank Secrecy Act (BSA).
This law requires financial institutions, primarily banks and securities firms, to:
- Customer identity verification (KYC: Know Your Customer)
- Reporting Suspicious Transactions
- Preventing money laundering (making money obtained through illicit means appear as if it had been obtained through legitimate means) and terrorist financing (providing money for terrorist activities)
This is a very important law to prevent the financial system from being abused.
So how does this relate to "non-custodial wallets"?
In fact, some people have suggested that developers of non-custodial wallets should also be subject to the Bank Secrecy Act, just like banks, and be able to collect user information and monitor transactions.
But in this version of the Clarity Act,Non-custodial wallets and the developers who create them should not be directly subject to the Bank Secrecy Act.This direction has been maintained.
This is because non-custodial wallets are merely tools. To put it in perspective, it would be like a company that makes wallets collecting information about everyone who buys them and monitoring what they use them for. That's a bit unrealistic, isn't it?
The developers are simply providing the wallet software (a program that runs a computer), and are not holding the users' assets. Since users manage their own assets, the developers believe that it is not appropriate to impose the same regulations on wallets as banks.
If developers were to be subject to strict obligations similar to those imposed by banks, it would be difficult for individuals or small teams to develop the service, and innovation would stagnate. There was also a risk that user privacy (the right to have personal information protected) would be excessively violated.
What's next? How will it impact our digital lives?
Now, with important provisions intact, the Clarity Act will finally be put to a vote in the House of Representatives, which is part of the U.S. Congress (similar to the House of Representatives in the Japanese Diet).
If the majority of senators vote "yes," the bill will be passed and then move on to the "Senate" (similar to the House of Councillors in Japan). If it also passes there and is signed by the president, it will become law.
If this law is enacted, it will be a tremendous boost for people who want to manage their own cryptocurrencies, such as Bitcoin, and for those developing the tools to do so, especially in the United States.
- An environment where you can use non-custodial wallets with peace of mindmay be in order.
- Development of new technologies and servicesBut there is a possibility of moving forward more freely.
The creation of rules for digital assets is attracting attention around the world. Since the actions of the US can affect other countries, it may not be something that is unrelated to us Japanese users. John will continue to follow this news and keep you updated!
A word from the author, John
This news has made us think again about the importance of "managing" our digital assets ourselves. Being responsible for our own assets without relying on banks and other institutions is a freedom that requires a good deal of knowledge, but at the same time, it also requires a good deal of knowledge. As technology develops, we hope that the laws that support it will be developed in a balanced way that respects the freedom and rights of users while also ensuring safety. We will continue to keep an eye on the relationship between new technology and laws!
This article is based on the following original articles and is summarized from the author's perspective:
The CLARITY Act Heads To House Floor For Vote With
Protection For Noncustodial Tools Intact