The Communications, Financial Services and Interstate (CFI) Committee Newsletter is an NCSL electronic newsletter for Committee members and interested staff. This newsletter provides monthly updates and links to the latest research and news highlights related to communications, financial services and interstate commerce.
The Senate approved, with amendments, the House fiscal year 2019 funding legislation, H.R. 6147 (115). The bill combines four of the 12 committee appropriations bills from Agriculture-FDA, Financial Services, S. 3107 (115), Interior-Environment, and Transportation-HUD. Congress declined to include additional elections security funding in the 2019 FY package, instead deciding to wait to see how states spend the $380 million appropriated in the 2018 omnibus H.R. 1625 (115). The Federal Trade Commission will also receive $17 million to implement and enforce the Telemarketing Sales Rule, promulgated under the Telemarketing and Consumer Fraud and Abuse Prevention Act which targets robocalling. Politico
The sessions that were presented on NCSL's webinar platform at Summit are now available as archive recordings. You can access the archived sessions in the Legislative Summit Video Gallery, or by clicking on the Streaming Video Gallery link directly under the rotator on the homepage. Some CFI Committee sessions of interest include: Artificial Intelligence: The Future is Here and The Future of Gaming and Sports Betting
The U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) defines virtual currency as "a medium of exchange that operates like a currency in some environments but does not have all the attributes of real currency." Peter Van Valkenburgh, one of the speakers during the session, Cryptocurrency: Currency of the Future or Just a Fad?, at the 2018 NCSL Legislative Summit, explained that cryptocurrencies reinvent bearer instruments, like a paper bearer bond, and makes them more efficient due to the lack of a middle man.
Virtual currencies can be centralized or decentralized. A centralized virtual or digital currency has an administrator, who can set the value of the currency by promising to redeem the tokens for a fixed amount of national currency or some item of value, or they can allow the value to float according to market supply and demand. In contrast, decentralized virtual currencies are created and maintained in an open community, without an administrator. To date, all of the decentralized virtual currencies are also known as cryptocurrencies because they utilize cryptography, like public and private keys, to track and control the digital tokens. Bitcoin is one of the most famous of the decentralized cryptocurrencies in use.
According to Van Valkenburg, state legislation and regulation regarding digital currencies falls in to the following categories: consumer protection, investment protection, anti-money laundering and tax. In the 2018 legislative session, there are 55 bills in 22 states and the District of Columbia.
Some states are utilizing regulations, rather than enacting new legislation to work with business and consumers. Lucinda Fazio, chief of regulatory affairs – consumer services, with the Washington state Department of Financial Institutions, described the process her state took in drafting its regulations after her agency determined that digital and virtual currencies fell under the existing state money services statutory act. In developing their regulation, Fazio explained that the more the underlying activities are examined for what they are, if they are in fact securities, money transmission, or storing something of value for another person, these underlying activities themselves are not new, so that they are regulated in a way that business can understand and can continue to innovate.
According to Andrew Beal, senior manager with Ernst & Young, there is an insane amount of demand in the market for this new asset class and the demand is fueled by a desire to speculate on these assets. Between 2016 and 2018, cryptocurrency exchanges increased from 48 to over 500 worldwide.
Initial coin offerings (ICOs) are a quasi-public offering, similar to initial public offerings, but without the expensive federal regulatory requirements. Small businesses and entrepreneurs have looked at ICOs as a potentially less regulated way of cutting out intermediaries like investment banks and law firms, to go directly to individuals to raise capital for their business idea. Michael Pieciak, commissioner of the Vermont Department of Financial Regulation, cautioned that ICOs are highly speculative and attract bad actors trying to take advantage.
On July 31, 2018, the U.S. Senate joined the House in passing a four-month extension of the NFIP, through Nov. 30, 2018. President Donald Trump quickly signed the bill.
The Senate Banking, Housing and Urban Affairs Committee may consider and approve more agency nominations once the Senate returns the week of Aug. 13. Nominations up for consideration include Kathy Kraninger to lead the Bureau of Consumer Financial Protection, Elad Roisman to serve at the SEC and Kimberly Reed to head the Export-Import Bank.
The FCC is accepting nominations for a new working group within its Broadband Deployment Advisory Committee (BDAC). The Disaster Response and Recovery Working Group was announced by FCC Chairman Ajit Pai during the July public meeting of the BDAC, and is charged with "making recommendations on additional measures that can be taken before a disaster to improve resiliency of broadband infrastructure, strategies that can be used during the response to a disaster to minimize the downtime of broadband networks, and actions that can be taken to restore broadband infrastructure during disaster recovery." The time commitment for participation will be substantial, although the majority of the work will be conducted online or via conference call. All applications must be submitted by email to the FCC including the information listed in the public notice no later than Sept. 7, 2018. Please contact Danielle Dean for more information.
The Federal Communications Commission's Officeof the Inspector General (OIG) released a report detailing its findings on the agency's electronic filing system webpage crash during the consideration of Pai's Restoring Internet Freedom Order, rolling back the previous administration's net neutrality order.
The FCC's chief information officer published a public statement saying the electronic filing system delays were due to multiple distributed denial-of-service (DDoS) cyberattacks in a deliberate attempt to make it difficult for legitimate commenters to access and file comments with the FCC. The OIG investigated the DDoS attack and made three major findings. The first is that multiple distributed denial-of-service attacks did not occur.
The second finding is the FCC did not respond to the event internally in a manner consistent with the severity of the event as stated in previous public statements. Pai relied on the CIO and other FCC IT office officials' information in responding to congressional inquiries and the report concludes with the third finding which outlines five inaccurate statements the FCC made to members of Congress. The IG's office state that due to "possible criminal ramifications associated with false statements to Congress" the matter was referred to the U.S. Attorney's Office for the District of Columbia. Politico
NCSL, NGA, NLC and NaCO released a joint letter expressing concern with the recently introduced U.S. Senate small cell bill. As mentioned in last month's newsletter, U.S. Senator John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science, and Transportation, and Senator Brian Schatz (D-Hawaii), the ranking member of the Senate committee's subcommittee on Communications, Technology, Innovation, and the Internet, introduced S. 3157, the Streamlining The Rapid Evolution And Modernization of Leading-edge Infrastructure Necessary to Enhance Small Cell Deployment Act or STREAMLINE Small Cell Deployment Act. The bill would update the Communications Act in the attempt to streamline the deployment of 5G networks. States have already taken the lead to streamline state and local regulations to encourage rapid deployment of 5G infrastructure. NCSL continues to track the bill's movement.
The FCC released its public notice announcing the appointment of 18 new members to the Intergovernmental Advisory Committee earlier this month. Congratulations to Delegate Timothy Hugo (R) from Virginia, Representative Kristen Hill (R) from Pennsylvania, Representative Gary Smith (R) from South Carolina and Senator Wayne Harper (R) from Utah. The expanded membership will now include 30 members, increased from the original 15, to provide state and local perspectives on key telecommunications policy issues. The mission as stated in the public notice, is for the members to provide guidance, expertise and recommendations to the commission on a range of telecommunications issues for which local, state and Tribal governments explicitly or inherently share responsibility or administration with the commission. The four state legislators will join three existing members, Senator Deb Peters (R) from South Dakota, Representative Angelo Puppolo (D) from Massachusetts, and Representative Jason Saine (R) from North Carolina.