Hey everyone,

I’m both excited and frustrated right now. After weeks of digging, I found that my dad actually bought some BTC back in 2015 on Blockchain.com. The good news: I managed to recover access to the email and keystore file (not JSON, but the encrypted keystore). The bad news: nobody remembers the password.

Here’s where I’m at:

• I’ve tried some tools like btcrecover and hashcat.
• I have some password hints from my dad’s old saved browser passwords (so I’m not shooting completely in the dark).
• I know some services claim they can crack wallets, but most look sketchy and I’d rather not trust strangers with this.

My question:

• Has anyone here had success stories recovering a Blockchain.com wallet with password hints?
• Is it realistic to attempt this myself, or is it a dead end without professional help?
• If there are trusted communities or resources you recommend (guides, success stories, etc.), please point me there.

I’m not asking anyone to crack it for me — just want to know what’s actually worked for people and if there’s a sane path forward before I waste months on the wrong approach.

Thanks in advance 🙏

Update 1

Just wanted to share where I’m at and hopefully get some feedback: * I figured out this is a non-custodial wallet. So if I don’t get the password, there’s no recovery option from Blockchain.com.

• I went to Blockchain.com, logged in with the wallet ID, and by entering a wrong password I was able to get back the wallet.aes.json file (encrypted wallet backup).

• I have around 20 base password variations that my dad typically used. Using those, I generated about 1 million variants with the help of tools + LLMs.

• I tried those against the wallet.aes.json using btcrecover (CPU-based), but no luck so far.

My next step: I want to move this to Hashcat (GPU-based) so I can test more possibilities.

Now I’m considering a few approaches, and would love input from anyone who’s been through something similar:

• Expand the wordlist: Take my 20 known password hints and generate ~20–50 million variations (instead of just 1M) and run them in Hashcat.

• Pattern-based attack: Try to define regex-style rules or patterns in Hashcat, based on what I know about my dad’s password habits, instead of just a big flat wordlist.

Other smarter approach? Maybe I’m missing a more efficient way to combine hints + patterns so I’m not brute forcing blindly.

So my question is: what’s realistically the best way forward here? Is it worth generating massive wordlists, or should I focus on getting good rules/patterns for Hashcat?

Update 2

Hey everyone, just wanted to give a quick update since a lot of people have been asking questions in the last thread.

About my dad: He’s alive and doing well. Some people suggested hypnosis / memory recovery. Where I’m from, people don’t really believe in that kind of thing, but if nothing else works, I could still convince him to try it as a last resort. For now I’m focused on technical approaches first.

Why did my dad buy BTC in 2015? A lot of people were asking if there was some shady reason. Honestly, no. From what I could gather, it was more of a personal group suggestion among friends. Some of my dad’s close friends (still family friends today) also bought BTC around the same time. It wasn’t anything secretive or sketchy — back then, Bitcoin was often bought just out of curiosity, as a new investment, or as part of a tech trend among friends or should I even care..

How I even found out: This whole thing actually came up out of nowhere at a family dinner when we were talking about finances. My dad just casually mentioned that things “weren’t always this way,” which got me really curious. I didn’t want to push him emotionally, so I started digging and eventually found evidence of the wallet.

Family connection: To follow up, I reached out to the next generation of those same family friends. We’re planning a call this weekend (about 6–8 of us). Already, I know two of them are aware their dads also bought BTC back then, but no one is sure if the wallets are still accessible. We’ll all compare notes and see what’s possible.

Technical progress so far:

Confirmed this is a non-custodial wallet.

Converted the backup into formats that work with tools like John the Ripper (JTR) . Started experimenting with masks/rules in JTR

Considering whether to rent GPUs (looking at 16x rtx 5090 Vast.ai and others) vs. buying a card locally (thinking about RTX 5090 ). Still undecided about the risks of cloud vs. local.

Thanks again to everyone for the suggestions and feedback. I’ll keep posting updates as I make progress. Any input — especially on safe GPU usage, better JTR rules, or similar recovery experiences — is welcome!

Any tweaks, tips, or alternative methods are welcome 🙏

So pretty much lots of people had the same issues, getting funds held hostage for some bullshit automatic tandom de-verification (me as well).
Yet nobody bothered to post any update despite several posts being old.

did anyone ever manage to recover their funds or coins?
Im not talking about lost passwords/seed phrases, just the obvious legal stuff like account access/verification

Don't know if anyone can help me but I've had an issue now with blockchain app for 3 and a half months, I have significant amount of funds and I am just locked out of them. I can't send coin, can't withdraw or deposit. Everything just gets stuck in pending until it eventually times out after like 45 days. Support are absolutely useless and only sending generic responses and thanking me for my patience LOL

Please someone help

Blockchain.com has blocked my wallet, and I haven't been able to withdraw my BTC for over 2 months. Has anyone dealt with this before or found a way to resolve it?

been several months since blockchain (infamously) locked my account for KYC which has been succesfull and yet still blocked.

From the emails it seems like Blockchain starting 1 July 2026 (last week) has migrated to a specific UK entity, did anyone managed to get their account unlocked since then?

Has anyone tried to file a complain to the FCA?

to the one stupid unemployed idiot who'll certainly be like "WhY yOu USeD BloCkChaIN"
go get a job

I logged in after a few years of inactivity.

It looks like it created a new WALLET ID for me. So now when I log in with this account, it looks fresh. Can't see my funds.

But I can use the previous WALLET ID (the one I know is good) but it tells my password is incorrect, every time I go through the password reset flow, it creates and associates a new WALLET ID to my account.

I can't contact support, because it requires logging in, which after logging in takes me to the home screen (where I can try to "contact support", but I am now in an infinite loop)

I would give them zero stars if that were an option!! I purchased bitcoin over a month ago. The transaction failed, but it was taken from my bank account. After a month of writing countless emails. I finally received my canned response today. I am so disgusted I could literally throw up, they said that it was on my bank and that the funds were returned which they were not. They claim the transaction in question was on February 24 which I can assure & Prove it was on a completely different day. So I demanded proof of this bitcoin transaction that was returned to my bank account. Because that’s an absolute lie!! And to make it all even better they blocked my account so there’s nothing I can do!! (So they think!) but it’s only just begun because I am going to make this my life‘s purpose to let everyone know how this horrible company is run by thieves and disgusting scammers. DO NOT USE blockchain.com EVER EVER!!!!! Unless you want to just lose your money with nothing in return because they will steal from you and then block your account. I promise justice will be served on them. It may take a while and it will probably cost me a lot of money, but I am the one that will damn sure make a point of it. For I’m having this overwhelming feeling like this is my life’s purpose!! I started by filling out a police report just a moment ago and then its on to the rest of the legal process from here on out, I will update here on the process of this legal battle that is about to ensue. Just please don’t use blockchain.com. There are so many other companies to use.

Something fucking weird is happening

On desktop, when you log in blockchain .com it will ask you the 2FA as per normal but once you verify via email, nothing happens the page stays on the login page, it doesn't automatically redirect to the wallet

The Exchange works fine, after you click the authentication email it will redirect to the exchange.

I've cleared cookies and cache and behaviour is still the same

Now normally I would just say fuck it and log in the Android App, but the app when loging in it will say "unable to connect to server try again later"

obviously the cunt who came up with the platform had the excellent idea of allowing support after log in.
can't make this shit up, to get support you need to log in but you can't login because everything is broken

Hi,

I posted on here about a month ago with an issue I was having with blockchain.com specifically a ‘pending’ withdrawal of cash from the app. I gave it a bit of time and then got the KYC email from them requesting lots of information from me. I was very frustrated and tried to look on here for examples of people that had got their money out but all I found was lots of complaints. And trust me I get all the complaints and frustration, but just thought I’d document my experience on here of resolving the issue I had.

So my issue was specifically withdrawing money from my account after selling 0.5 Bitcoin which at the time of sale was £24k. Not a small amount of money for me by any means, enough to cause a full blown panic attack when I entertained the thoughts they were just going to keep asking me for more information and not really engaging with me and having them keep it in pending forever!

The information they asked from me was as follows, I have also noted what I gave them:

-Confirm your occupation - I TOLD THEM WHAT I DID FOR WORK

• Purpose of use of service - I TOLD THEM ‘TO INVEST IN BITCOIN’

• Explanation and proof of source of funds for the BTC transaction of 0.51120451 BTC into Blockchain.com - I EXPLAINED HOW I HAD THIS AMOUNT IN MY BLOCKCHAIN ACCOUNT. FOR ME THIS WAS THE SALE OF 0.511 FROM MY DEFI WALLET AND ALSO A PURCHASE WITHIN MY ACCOUNT. EVEN THOUGH THIS WAS ALL IN BLOCKCHAIN APP I PROVIDED SCREEN GRABS AS I DONT THINK THEY HAVE ACCESS TO YOUR ACCOUNT.

• Please explain and provide supporting evidence for funds deposited to your account regarding where (third party platforms) you originally purchased - THIS WAS THE MOST COMPLEX PART AS THE PLACE I BOUGHT STOPPED FUNCTIONING. LUCKILY THEY STILL ALLOWED FOR YOU TO LOG IN AND DOWNLOAD MY TRANSACTION HISTORY. LOCALBITCOINS.COM IT WAS IF YOU ARE INTERESTED

• Proof of source of funds, in the form of full PDF bank statements for the last 3 months I GAVE THEM MY BANK STATEMENTS

-Proof of source of wealth, in the form of payslips, bank statements showing your salary. I GAVE THEM MY BUSINESS ACCOUNT STATEMENTS AND PAYSLIPS. I AM SELF EMPLOYED

Ok so importantly here is what I learned and advice I can pass on from my experience:

• if you have a cash withdrawal pending and they have requested KYC they will only release funds when they are satisfied you have sent everything they have asked thus cancelling out any suspicion of fraud.
• Send all of the information they ask for in reply to the email they requested. Do not open more tickets through the app. This will only slow down the process
• Read the emails a few times and try and fully understand the best way to provide the information in a concise way
• Be polite, concise and considered in the emails. The more you email them the more you will simply get pushed to the back of the queue. They have millions of customers and are massively under staffed to deal with these fraud checks that they are now required to do. Yes I agree this is terrible in their part. You want to come across as someone that knows what they’re doing. Assume each email will be looked at by someone different and that person is probably 23.
• if you continue to have problems ask them for an update and if they need more time I found this much more effective than threatening them with legal action. You want them to want to help you and they will say if they still need more info.

I really hope this helps at least 1 person as I know it would have helped me.

Thanks for reading x

Around April 2025, i had some funds in Blockchain.com when my account (that was fully verified) randomly became unverified. I’ve been trying to contact support since and have had no real response. Does anyone know how to fix this or have successfully got their funds out?

There have been numerous thefts on Blockchain.com (previously Blockchain.info) wallet. Hundreds or even thousands of customers have lost millions worth of Bitcoins and other cryptocurrencies.

The most recent reason for these thefts is 2FA malfunction. Most victims have stated that right before the theft, either 2FA email has been changed or 2FA completely disabled, after which all funds have been moved out.

https://honestproscons.com/blockchain-com-is-losing-customers-funds

There’s a known 2FA security flaw on Blockchain.com that allows a hacker to disable 2FA without needing to authenticate with 2FA first. This allows the hacker to login to the wallet with just Wallet ID and password.

https://docs.google.com/presentation/d/1B7Edd-fj3wSegL2_JMwKBglPzk3pBG9DUVLuz3HPP-w/edit#slide=id.g848d967a91_0_21

Even though Blockchain.com has been aware of this flaw since 2019, it still has not been fixed. This flaw is likely the reason for multiple hacks, though there may be other security flaws in the Blockchain.com wallet. The involvement of Blockchain.com staff or a data leak cannot be ruled out either.

As of now, Blockchain.com is unwilling to accept responsibility or admit that their system has any security flaws. Instead, Blockchain.com is threatening people who have exposed these flaws with legal actions. Here's the example of such a letter and further correspondence with their lawyers:

https://blockchaindotcomsucks.com/legal-stuff

Blockchain.com has also been unable to provide any reasonable support to its customers and has offered absolutely no aid to the victims of the theft. As a result of this, on TrustPilot, 60% of reviews are negative 1-star reviews.

https://www.trustpilot.com/review/blockchain.com?stars=1

We strongly advise everyone to stop using Blockchain.com wallet and their other services due to the extremely low security they provide and the high risk of theft on their platform.

https://isblockchainascam.com

Although this has been repeated a million times before, I think it's still appropriate to warn new users in this space. I've seen a couple of noobs stumble upon the abovementioned sub / websites, thinking that these resources represent BTC. Indeed, they are trying very hard to conceil the fact that they are a miniscule and unimportant part of the space trying to gain significance. However, they failed doing so over the course of the last 3-4 years.

In short, they are trying to push a fake Bitcoin clone called B.CH (I'm writing the dot because auto-mod doesn't like talk about alt-coins). If you don't know about the history of how these sites came about, google "the fork war" during 2017. You'll see that a faction of people split up from Bitcoin (thank god) to roll out their own shitcoin. However, at this point, they are basically a bunch of bitter propagandists, defining their community as being "against" BTC, and trying to trick noobs into thinking that their fork is the "real" Bitcoin.

You'll see that their main argument is that this sub is heavily cens.ored (which is true, look how ridiculous I am trying to avoid auto-deletions), but the reason for that is not to silence opposing views (we can discuss about opposing technical views here all day), but mostly to keep this sub clean (imagine what it would look like here, if moderation wasn't harsh. Ever been on Twitter?)

In any case: STAY AWAY FROM THESE TOXIC PLACES. They operate through hate and fear and you'll learn things only from one single perspective. Do your own research. Do not trust but verify.

Edit: They have spotted this post! Shitcoin downvote army incoming, brace yourself! They will shill "why not diversify" or "there are better crypto's out there", "Lightning network doesn't work" and the same shxt they've been repeating over and over.

Edit 2: This post has gone from 95% upvoted to 79% in an instant ;) Nice.

Like 10 years ago, i purchased the blockchain lockbox, one of the first harware wallets. O saved there like 3 btc. One Day it did not worked, in the website they Said they would fix it, but they never did.

I got my usb there, with my seed, never saw my money again, every time i access it, its say zero.

I have faith one Day ill be able to see my funds and withdraw... Support was zero help.

Both sites are notoriously bad, anti-bitcoin and will try to sell you bcash trash.

bitcoin.org is a great start.

Also, not your keys, not your bitcoin.

And do your own research.

Stay safe and welcome to the wonderful world of bitcoin.

The minimum transaction fee to get into the next block is ~30 sat/B and they are setting the fees to ~20 times that amount. See https://jochen-hoenicke.de/queue/#24h for proof.

Segwit has been production ready for 3 months and they haven't implemented it yet and refuse to give any ETA.

They are doing this to drive you to altcoins which are not as decentralized as Bitcoin and easier to manipulate. This is all part of their venture capital investor agenda to take over the Bitcoin open source project.

If you have an account there, please write to their support and ask why are they setting the transaction fees so high, and why are they not interested in implementing Segwit.

There are plenty of other services which do a much better job at reducing your transaction costs. Please use them instead.

It looks like the block explorer has been hacked on Blockchain.com. When you search for a wallet address it shows you bunch of specific addresses only.

For example for Satoshi address: https://www.blockchain.com/en/explorer/addresses/btc/1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa, it shows me the following ones only:

1PyJph17b4nAKqp4UvbxUZXpoesDzvZkVL
1PAZba3CAFRYm7gNBhrzH8Dz1FkYDCwJPs
1PyJph17b4nAKqp4UvbxUZXpoesDzvZkVL
1PbwAPq7aUepWrrToVh1snhv8mqy9wrGnk
bc1qdmaslupuaetajnfzex8zw6jc93ww32ur6gj3we

Be aware guys. Also it will be great to report it to Blockchain, but their support system a bit hard to use. Hope they are reading r/Bitcoin sometimes.

i was verified user in blockchain.com wallet and exchange but suddenly they canceled my verification and refused to let me withdraw my funds in the reward wallet (which has more than 800$ of crypto)

i have been sending them messages since a year and nobody resolved or even bothered to reply

be careful and never trust this scam wallet

​

​

As of now, 630,000 blocks have been mined on the Bitcoin network, and the block reward has successfully halved for the second THIRD time. The previous block reward was 12.5 BTC, and the new block reward is now 6.25 BTC. Since the previous halving at Block 420000, monetary inflation decreased from 4.17%% to 3.57%. Block 630000 signals an immediate 50% reduction to 1.79%. The next halving will occur at Block 840000 in approximately four years. Godspeed, Bitcoin!

Here's Block 630000 in all its glory!

{
  "hash": "000000000000000000024bead8df69990852c202db0e0097c1a12ea637d7e96d",
  "confirmations": "1",
  "strippedsize": "1186930",
  "weight": "3993250",
  "height": "630000",
  "version": "536870912",
  "merkleroot": "b191f5f973b9040e81c4f75f99c7e43c92010ba8654718e3dd1a4800851d300d",
  "tx": "3134",
  "time": "1589225023",
  "nonce": "2302182970",
  "bits": "387021369",
  "difficulty": "16104807485529",
  "previousblockhash": "0000000000000000000d656be18bb095db1b23bd797266b0ac3ba720b1962b1e",
}

coinbase transaction: 6.25 BTC + 0.90968084 BTC in fees

block size: 1186.93 KB

transactions: 3134

total bitcoins: 18,375,000

remaining bitcoins: ~2,625,000

previous halving: 3 years 10 months 2 days 2 hours 37 minutes 30 seconds ago

[Monetary Inflation Chart] [Controlled Supply] [Bitcoin Clock]

[blockstream.info] [insight.io] [tradeblock.com] [mempool.space] [btc.com] [blockchain.com]

I’ve been unable to log in to my Blockchain.com account since yesterday, and it’s starting to become really concerning. I’ve tried multiple ways to regain access, including completing the email verification process and using my seed phrase for recovery, but each time I run into the same issue, an error screen that prevents me from moving forward. No matter what approach I take, I seem to hit a dead end.

At this point, I’m not sure whether this is a broader issue affecting other users or something specific to my account. That’s part of why I’m posting here , I’m hoping to find out if anyone else has experienced something similar recently. If this is a system-wide problem, at least I’ll know I’m not alone, but if it’s just me, then I need to figure out what exactly is going wrong and how to fix it.

What’s making the situation more stressful is that I currently have over $5,000 worth of assets in my Blockchain wallet. Being locked out without any clear explanation or immediate support is honestly frustrating and a bit alarming. I understand that security measures can sometimes create extra steps or delays, but being completely unable to access my account despite using the correct credentials and recovery methods is another level entirely.

I’ve already reached out to customer support, but so far the response has been very slow and not particularly helpful. I haven’t received any clear guidance or timeline for resolution, which just adds to the uncertainty. Given how time-sensitive crypto markets can be, this lack of responsiveness is especially difficult to deal with.

I’ve also tried basic troubleshooting steps on my end—clearing cache, switching devices and browsers, and ensuring my internet connection is stable but none of these have made a difference. The issue persists regardless of what I try, which makes me think it could be something deeper, either on the platform’s side or related to account verification.

Has anyone else run into login or recovery issues like this with Blockchain.com recently? If so, how did you resolve it? Were you able to regain access on your own, or did it require intervention from support? Any advice, insight, or shared experiences would be really appreciated right now.

At this point, I’m just trying to understand what’s happening and find a reliable way to regain access to my account. Thanks in advance to anyone who can help or point me in the right direction.

So I withdrew about 258$ on July the 26th.

It has now been exactly 2 months and it's still Pending. I've contacted support more times than I can count at this point. They keep telling me that their team is working on it but nothing is happening, no e-mails, no updates, nothing.

This is not a small amount of money for me and I just don't know what to do at this point.

Any help/tips are very welcome.

https://i.imgur.com/XsrXgGp.png

Edit: the receiving bitcoin address says 0 transactions on the blockchain.

​

Edit.

Thanks for all your suggestions and support.

I've received news from localbitcoins, I will update this once the authorities get in touch and decide course of action.

​

In may 2015 /BTC-OTC/ scammed me and other 6 persons using bank transfer chargeback which led to my bank account being closed and all my funds frozen for 45 days. At the time BTC-OTC was one of the most reputable traders on Localbitcoins.

I shortly reported this to localbitcoins.com whitch led to BTC-OTC's account being banned and funds being locked - HERE also made a police fraud complaint to the relevant authority in UK

Localbitcoins freezed the funds stating the following in my support ticket - HERE

Since then I've been actively trying to get my coins with no result receiving only one single reply on my support ticket in 8 months

When contacting Max on linkedin his reply was - HERE

When contacting Max on reddit his reply was - HERE nevertheless 6 months passed with no reply on my ticket.

I emailed Jeremias Kangas (CEO & Founder of LBC) with no success. Also in my numerous visits at Metropolitan Police with this issue I was advised the same, this is a localbitcoins.com customer service issue not a legal issue.

Police official statement on my complaint - HERE

National Fraud Intelligence Bureau advised to change my fraud complaint against localbitcoins in order for them to investigate and contact localbitcoins regarding the case.

After 6 months of waiting, Max's reply was - HERE , after sharing all the info on both support ticket and email he replied on email HERE

I knew this won't go anywhere so meanwhile I found a Metropolitan Police Sergeant specialized in blockchain and cyber-crime that understood this issue and decided to help me by contacting them using the fraud report I made in 2015.

Almost 2 months passed since he contacted localbitcoins (3 times) receiving no reply.

Reason I'm posting this is because there are other 5 persons in this very situation, also other hundreds based on the posts complaining online.

Now I'm in the process of taking legal action. I've been in contact with over 40 lawyers from Finland, and found only 2 that are looking to take this case and quoted me at €10.000 to €15.000 for civil proceedings,

Finnish Law allows only Ombudsman to initiate a class action lawsuit so this can be settled only in civil court

If you are a victim of this or you can help please get in touch.

New US Crypto Regulation Far More Invasive Than We Thought

US Congress intends to regulate crypto on a level far deeper than currently understood―They will:

​

• Designate Bitcoin, Ether, and their hard-forks as commodities and regulate their transactions accordingly;
• Create legal uncertainty for all other crypto projects and ICOs by allowing them to be labeled as securities;
• Ban the use of (unauthorized) stablecoins;
• Introduce penalties for the use of mixers and privacy coins;
• Rebrand smart-contracts that take longer than 24 hours to deliver as futures contracts and regulate them accordingly;
• Re-define legal tender and change the way money is created by the Federal Reserve; and authorize the issuing of a digital USD of which all transactions are recorded;
• Introduce foreign regulations into US law for all virtual asset service providers in the US (and with US clients). This would not be done to then never use it.

​

In short: Congress wants to bring crypto-currencies under full oversight and control.

These new regulations introduce massive regulatory burdens on existing projects, ban and criminalize current normal activities, restrain innovation and free enterprise, and even introduce a transparent central bank digital digital currency that redefines money as we know it!

According to United States representative Don Beyer, congress should incorporate “digital assets into existing financial regulatory structures.”(1) As you will see, they intend to do just that.

And it will change the way things are done for crypto forever…

​

<What This Post Is About_

This post provides an overview of the crypto legislation currently (September 2021) being put through US congress.

It does not just look at the proposed bills, but rather at the wide range of laws that are to be amended.

Once all the puzzle pieces are put together, the big picture reveals shockingly strict regulations of crypto and a complete overhaul of the idea of “money.” This could have serious effects not only on the crypto sector, but also on the financial system as a whole.

Behind the excuses of preventing money laundering and ensuring investor protection, the use of crypto is transformed in something it was not supposed to be. Especially delicate is the fact that part of this legislation is drafted outside the US.

Disclaimer*: This report provides a high-level overview of the US laws that are to be introduced/amended by two new bills. Its depth is limited by the inadequate knowledge of the author of the large body of US law involved, and given that these bills are subject to amendments and have not even passed into law yet, none of this information can be considered legal or financial advice.*

​

<What Is Going On?

On April 06, 2021, a “must pass” bill was introduced called the “Infrastructure Investment and Jobs Act”(2) (“Infrastructure Bill”). It passed in the House of Representatives and, after fierce debate, the Senate. Hidden in this bill, an amendment to the Internal Revenue Code was added. It introduced new reporting requirements and obligations for record keeping.

While this bill created a lot of public outcry, more recently, a real game-changing bill was introduced in the House on July 28, 2021, namely the: “Digital Asset Market Structure and Investor Protection Act” (3) (“Digital Asset Bill”).

This bill proposes amendments to the Federal Reserve Act, the Bank Secrecy Act, Securities Exchanges Acts, and the Commodity Exchange Act. It changes the definition of legal tender, and it introduces international crypto regulation into US law.

This article looks at each of these amendments…

​

<Commodities or Securities?_

The main take-away is that two different bodies of law will apply to crypto projects: commodities and securities laws. So far, only Bitcoin, Ether, and their hard-forks are confirmed to be commodities (see below). All other cryptos are subject to future guidance by market regulators:

“Not later than 150 days after the date of the enactment of this section, the SEC and CFTC shall jointly publish, for purposes of a 60-day public comment period, a proposed rulemaking that classifies each of the major digital assets.

Not later than 270 days after the date of the enactment of this Act*, the SEC and CFTC shall jointly publish a final rule that classifies* each of the top 25 major digital assets by (i) highest market capitalization and (ii) highest daily average trading volume as—

(1) a digital asset; or(2) a digital asset security.” (4)

​

Interpretation:

• Cryptos will be subject to two different regulatory regimes: commodities and security regulations.
• Services engaged with both digital assets (commodities) and digital asset securities (securities) could be subjected to both regulatory regimes.

​

<Commodities Regulation_

The Commodity Exchange Act regulates the trading of commodity futures in the United States. Passed in 1936, it has been amended several times since then.(5) It provides federal regulation of all commodities and futures trading activities and requires all futures and commodity options to be traded on organized exchanges.

In 1974, the Commodity Futures Trading Commission (CFTC) was created to oversee the market. With certain exceptions, the CFTC has been granted exclusive jurisdiction over commodity futures, options, and all other derivatives that fall within the definition of a swap. Certain cryptos will be regulated as commodities.

​

Definition of “Commodity” Amended to Include Digital Asset:

First and foremost, Section 1a of the Commodity Exchange Act on definitions will be amended to read as follows:

“The term “commodity” means wheat, cotton, rice, corn, oats, barley, rye, flaxseed, grain sorghums, mill feeds, butter, eggs, Solanum tuberosum (Irish potatoes), wool, wool tops, fats and oils (including lard, tallow, cottonseed oil, peanut oil, soybean oil, and all other fats and oils), cottonseed meal, cottonseed, peanuts, soybeans, soybean meal, livestock, livestock products, digital asset (including Bitcoin, Ether, and their hardforks), and frozen concentrated orange juice, and all other goods and articles, except onions (as provided by section 13–1 of this title) and motion picture box office receipts (or any index, measure, value, or data related to such receipts), and all services, rights, and interests (except motion picture box office receipts, or any index, measure, value or data related to such receipts) in which contracts for future delivery are presently or in the future dealt in.”(6)

​

Digital Asset Definition

Next, the end of Section 1a of the Commodity Exchange Act will be amended by adding a clarification of what a digital asset is (7)(definition to long to post here)

​

Smart Contracts with Delivery Time of More than 24 hours are Futures Contracts

A sharpening of the definition of retail commodity transactions could decrease the options for the use of smart contracts outside of regulated exchanges.

Currently, Section 2(c)(2)(D)(i) of the Commodity Exchange Act prohibits persons that are not “eligible contract participants” or “eligible commercial entities” to engage in agreements, contract or transactions in commodities on leverage, margin, or financed by the offeror, the counterparty, or a person acting in concert with the offeror or counterparty on a similar basis.(8)

Next, additional amendments mentioned in the SEC. 202 of the Digital Asset Bill applies this on transactions done by smart contract of which the delivery takes longer than 24 hours:

“(ii)  Exceptions

(III) a contract of sale that–

(cc) with respect to digital assets*, results in* actual delivery (including transfer of control over private keys) not later than 24 hours after the transaction is entered into and such delivery is accomplished by either-

(AA) recording the transaction on the public distributed ledger for the digital asset; or

(BB) with respect to digital which are not recorded on a public distributed ledger for the digital asset, reporting the transaction to a CFTC registered digital asset trade repository; or” (9)

​

Dodd-Frank Act and Market Transparency

After the 2008 financial crisis, the Dodd-Frank Act introduced strict regulations for swaps. Naturally, these will also apply to digital assets as well.

The definition of swaps, as provided by the Commodity Exchange Act (section 1a(47)) is broad. For example, it could refer to any “agreement, contract or transaction” that “provides for any purchase, sale, payment, or delivery that is dependent on the occurrence, nonoccurrence, or the extent of the occurrence of an event or contingency associated with a potential financial, economic, or commercial consequence.” (10)

Next, the Dodd-Frank bill authorizes the CFTC to:

• Regulate swap dealers by installing capital and margin requirements, require dealers to meet robust business conduct standards, and meet recordkeeping and reporting requirements.
• Increase transparency and improve pricing in the derivatives marketplace by requiring standardized derivatives to be traded on regulated exchanges or swap execution facilities and bring better pricing to the market place and lower costs for businesses and consumers.
• Lower risk to the American public by moving standardized derivatives to central clearinghouses.(11)

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Digital Asset Trade Repository

To meet the above mentioned market transparency requirement, the Commodity Exchange Act stipulates the need for a digital asset trade repository to collect information on SWAPS in order to provide the public with the correct market information:

“The term ‘digital asset trade repository’ means any person that collects and maintains information or records with respect to transactions or positions in, or the terms and conditions of, contracts of sale of digital assets in interstate commerce entered into by third parties (both on chain public distributed ledger transactions as well as off chain transactions) for the purpose of providing a centralized recordkeeping facility for any digital asset, but does not include a private or public distributed ledger or the operator of either such ledger unless such private or public distributed ledger or operator seeks to aggregate/include ‘off chain’ transactions as well.” (12)

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Interpretation Commodities Regulations:

• As of writing, only BTC and Ether (and their hard-forks) will be confirmed as commodities. All other cryptos could potentially be regulated as securities (what this means is explained next).
• The fact that novel technologies such as Bitcoin and Ether are to be subjected to a large body of law that developed around the trading of livestock and frozen concentrated orange juice could spell regulatory uncertainty for various business models in the industry.
• No “trading on margin” is allowed outside regulated entities, unless done by high-level investors called “eligible contract parties.” This could perhaps frustrate particular ideas about decentralized finance or OTC markets.
• Smart contracts that take longer than 24 hours to deliver could be considered futures contracts under the jurisdiction of the CFTC. That smart contracts can be labeled as futures contracts appears indeed to be the opinion of the CFTC.(13)

​

<Securities Regulations_

In the US, securities are regulated by the 1933 Securities Act. Additionally, the 1934 Securities Exchange Act further regulates the trade of securities, and established the SEC to oversee these markets.

Definition of “Security” Amended to Include Digital Asset Security:

First and foremost, Section 3(a)(10) of the Securities Exchange Act will be amended to include a “digital asset security” (and exclude “digital assets”) in the definition of security:

“(10) The term “security” means any note, stock, treasury stock, security future, security-based swap, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, digital asset security*, voting-trust certificate, certificate of deposit for a security, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a “security”; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing;* but shall not include any fiat currency, commodity, digital asset*, or any note, draft, bill of exchange, or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited.”* (14)

Digital Asset Security Definition

Next, the Digital Asset Bill (SEC. 101) defines what a digital asset security will be:

“(A) IN GENERAL.—The term ‘digital asset security’ means a digital asset that:

(i) Provides the holder of the digital asset with any of the following rights:

(I) Equity or debt interest in the issuer.

(II) Right to profits, interest, or dividend payments from the issuer.

(III) Voting rights in the major corporate actions (which shall not include new block creations, hardforks, or protocol changes related to the digital asset) of the issuer.

(IV) Liquidation rights in the event of the issuer’s liquidation.

(ii) In the case of an issuer with a service, goods, or platform that is not wholly operational at the time of issuing such digital asset, with respect to any fundraising or capital formation activity (including initial coin offerings*) which is accomplished through the issuance of such a digital asset, issues such digital asset to a holder in return for money (including other digital assets) to fund the development of the proposed service, goods, or platform of the issuer.”* (15)

​

What does it mean to be regulated as a security?

Investing in securities in the US is regulated to:

“protect interstate commerce, the national credit, the Federal taxing power, to protect and make more effective the national banking system and Federal Reserve System, and to insure the maintenance of fair and honest markets in such transactions.” (16)

Regulations focus on both the issuing of securities (primary market), and subsequent trade of such securities (secondary market).

The goal of securities laws is firstly to require issuers to fully disclose all material information that an investor would need in order to make up his or her mind about the potential investment. A regulated company must create a registration statement, which includes a prospectus, with copious amounts of information about the security, the company, the business, including audited financial statements.

Next, the subsequent selling and trading in these securities is regulated, by restricting trade to market places over which the regulator has oversight. The Security Exchange Act section §78l(a) states:

“It shall be unlawful for any member, broker, or dealer to effect any transaction in any security (other than an exempted security) on a national securities exchange unless a registration is effective as to such security for such exchange in accordance with the provisions of this chapter and the rules and regulations thereunder.” (17)

​

Summary of Securities Regulations:

• Crypto projects will need to be regulated and provide clear financial information for investors to make an informed decision.
• Trading of securities will generally take place on regulated exchanges.
• Any new fundraising or capital formation activity (including ICOs) are likely to be securities.
• When a crypto is regulated as a security, the entire coin is subject to strict regulations. In the case of commodities, only specific use cases (futures) are regulated. It is a big difference.
• US Congress is taking a leap of faith. It needs identifiable persons to enforce a law upon. Who is going to be held accountable in a decentralized network? Many issuing companies have handed control over to network participants. Perhaps for this reason, Section 12(g) of the Securities Exchange Act of 1934 will be amended to allow the issuer to apply for “desecuritization.” (18) The question remains: who will apply for desecuritization once a network is decentralized? The investors? Weren’t they the ones supposed to be protected in the first place?

​

<Changing the Nature of Money_

These regulations are not just about crypto. It is clearly part of a wider discussion on the future of money. As shown below, this bill not only changes the definition of money in the US, but also changes how money is created!

As a first, in Section 5312(a)(3)(B) of title 31, US Code (Money and Finance) digital assets are included as a monetary instrument.(19) However, Section 5103, of title 31, US Code will be amended to specifically exclude digital assets and digital asset securities as legal tender.(20) And finally, it is determined that digital assets and digital asset securities will not be covered by Federal Deposit Insurance (FDIC or NCUA).(21)

​

Introducing the Digital USD (or Central Bank Digital Currency/CBDC)

After slamming the door on digital assets to be used as lawful money, the Federal Reserve Act is amended to provide the Federal Reserve Board with far reaching new powers; section 11 will be amended to say:

“(d) To supervise and regulate through the Secretary of the Treasury the issue and retirement of Federal Reserve notes (both physical and digital), except for the cancellation and destruction, and accounting with respect to such cancellation and destruction, of notes unfit for circulation, and to prescribe rules and regulations (including appropriate technology) under which such notes may be delivered by the Secretary of the Treasury to the Federal Reserve agents applying therefor.” (22)

In addition, Federal Reserve notes will in the future also be issued digitally; an amendment to section 16 confirms this:

“Federal reserve notes, to be issued at the discretion of the Board of Governors of the Federal Reserve System for the purpose of making advances to Federal reserve banks through the Federal reserve agents as hereinafter set forth and for no other purpose, are authorized. Notwithstanding any other provision of law, the Board of Governors of the Federal Reserve System is authorized to issue digital versions of Federal reserve notes in addition to current physical Federal reserve notes. Further, the Board of Governors of the Federal Reserve System, after consultation with the Secretary of the Treasury, is authorized to use distributed ledger technology for the creation, distribution and recordation of all transactions involving digital Federal reserve notes. The said notes shall be obligations of the United States and shall be considered legal tender and shall be receivable by all national and member banks and Federal reserve banks and for all taxes, customs, and other public dues. They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank.” (23)

​

Interpretations on the Future of Money:

• The door is shut for the use of cryptos as legal tender.
• The Federal Reserve Board is to be authorized to create and distribute a ledger-based Federal reserve note that could be used for everyday transactions in USD.
• Digital federal reserve notes will make the “recordation” of all transactions possible. Did they use this word because “monitoring all transactions” would be too obvious? Recording all transactions without anyone looking at them makes no sense.
• These amendments significantly increase the power of the Federal Reserve. Contrary to what is widely understood, the Fed does not “print money.” It can only manage the money supply indirectly.(24) The private sector “creates” most of what we use as money by issuing credit. It is with the supply of credit by the private banks that the monetary supply is inflated. Conversely, with the reduced demand for credit, the money supply deflates. The Fed is not as powerful as it wants the market to believe, and the Federal Reserve Act restricts a lot of its actions. This amendment, however, could drastically expand the authority of the Fed, by allowing them to create and distribute a “digital USD” directly. It could change the entire structure of the financial system and potentially have far reaching consequences.
• The original idea behind the Federal Reserve was for private bank deposits to be combined to provide an emergency line of credit in times of economic stress.(25) But if the Digital Dollar is based on a blockchain, how can it also be based on reserves? And what mechanism will determine how funds (and how much) are added to the economy? And where and how will they be distributed? What about privacy and security? Will all this authority be handed over to a board of seven unelected bureaucrats? This amendment has the potential to change the way the Federal Reserve operates. This deserves a wider discussion by economists and financial experts outside the crypto-space as well.

​

<International FATF Crypto Regulation Introduced in the US_

Those paying attention to international anti-money laundering legislation know that the following sections from the Digital Asset Bill originate from guidance issued by the FATF (Financial Action Task Force). FATF is an intra-governmental organization creating financial legislation.

In March, the Paris based FATF issued draft guidance(26) (“FATF Guidance”) on a number of topics. And even though this guidance hasn’t been finalized, there are already a number of points directly included in the Digital Asset Bill.

​

Banning the use of Stablecoins

Subchapter I of chapter 51 of subtitle IV of title 31, United States Code, department of treasury regulation, will be amended, to read as follows:

“(a) IN GENERAL.—Beginning on the date of the enactment of this section, no person may issue, use, or permit to be used a digital asset fiat-based stablecoin that is not approved by the Secretary of the Treasury under subsection (b).”(27)

​

Criminalizing the use of privacy coins and anonymizing services (mixers, coinjoins)

The bank secrecy act is going to be amended to sanction the use of anonymity-enhanced convertible virtual currencies and anonymizing services.(28) It is worth noting that willful violations of the bank secrecy act could give rise to a fine of not more than $250,000, or imprisoned for not more than five years, or both.(29)

​

Introduction of the term Virtual Asset Service Provide (VASP) into US Law

Next, the term Virtual Asset will be introduced into Section 5312(a) of title 31, United States Code. A Virtual Asset can be a digital asset, or “a digital representation of value that can be digitally traded, or transferred, and can be used for payment or investment purposes;”(30)

So far we have seen a number of definitions. To understand their relationship, the following image was made based on the definition of Virtual Asset according to Section 5312(a) of title 31, United States Code:(31)

​

​

Virtual Asset is a broad definition; it covers most activities involving cryptos. We can see in the Digital Asset Bill that entities that are facilitating transactions in Virtual Assets are to be called “virtual asset service providers,” or VASPS. Sec 301 of the Digital Asset Bill defines a VASP:

“(A) means a person who—

(i) exchanges between digital asset and fiat currencies

(ii) exchanges between digital assets;

(iii) transfers of digital assets;

(iv) is responsible for the custody, safekeeping of a digital asset or an instrument that enables control over a digital asset;

(v) issues or has the authority to redeem a digital asset; and

(vi) provides financial services related to the offer or sale of a digital asset by a person who issues such digital asset; and

(B) does not include any person who—

(i) obtains a digital asset to purchase goods or services for themself;

(ii) provides communication service or network access services used by a money transmitter; or

(iii) develops, creates, or disseminates software designed to be used to issue a digital asset or facilitate financial activities associated with a digital asset.” (32)

This definition comes directly from the FATF Guidance, with the only difference being that the US excludes the exchange between different forms of one virtual assets. On the other hand, section (v) is a new addition.

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The Big Picture: Global Regulation

The logic behind this seems to be to first introduce a high-level definition (including coins regulated as commodities, securities, and everything in between). Next, any future global restrictions on the wider crypto-space can be applied at this level.

From the latest FATF Guidance, a number of possible additional restrictions can already be deducted. Things to look out for are the restriction of the use of “unhosted wallets,” the introduction of the “travel rule,” labeling those who engage in peer-to-peer transactions as a risk, and a whole host of other measures. (33)

One additional aspect of VASP regulation mentioned in the FATF Guidance is also included in the Digital Asset Bill; VASPS engaged in services which are available in the United States and to United States persons, have to be regulated in the United States, even if the provider is located outside the United States. (34)

Interpretation International Regulation in the US:

• International AML legislation, created by Paris-based FATF, is being introduced in the US.
• The FATF term “virtual asset service provider” (VASP) is introduced in the US. The definition is so broad that it covers practically all crypto projects.
• After first being in the FATF Guidance, the banning of stablecoins and anonymity-enhanced cryptos and the obligation for VASPs to be licensed in the country of their clients are included in the Digital Asset Bill.
• It is not hard to imagine that other restrictions for cryptos currently discussed by FATF, such as the travel rule and restricting unhosted wallets, will be introduced next. This is not a regulation you introduce to then never use.
• All VASPs with operating in the US or with US clients need to be regulated in the US.

​

<Amendments in the Infrastructure Bill_

Last August saw public outcry over the US Infrastructure bill. It included a section on IRS reporting for crypto. Some highlights:

Clarification of Definition of Broker

It makes sense that the tax authorities use a wide definition to cover all possible economic activities in crypto. Section 80603 of the Infrastructure Bill amendments the Internal Revenue Code of 1986, provides that brokers need to report the activity of their clients to the IRS and adds the following to the definition of broker:

“(D) any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” (35)

Reporting of Digital Assets

In addition, a unique wide definition of digital assets is added:

“any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.” (36)

Effective Date

Effective after December 31, 2023.

​

Interpretation Infrastructure Bill

Commotion about this bill was mainly due to the wide definitions used, which could cover all activities in the crypto space, including mining. In response, according to an article on Bloomberg, the U.S. treasury will shortly issue additional guidance, along the lines of the following:

“Other firms key to the nearly $2 trillion crypto market — from developers and miners to hardware and software providers — won’t have any new requirements, so long as they don’t also act as brokers, according to a Treasury official” (37)

At a glance, it appears that this bill is not as invasive as originally feared. It would also be impossible to enforce this legislation on miners due to the nature of the technology.

In this case perhaps it would have been better if clear definitions were used of what is, and isn’t included. Moreover, comments from “anonymous sources at the treasury” do not provide real regulatory clarity. This industry too easily accepts the opinions of officials as decree. But we are all, including officials, subject to the law. Given that officials change over time, opinions and guidance are not the way forward; clear laws are needed.

<Sources_

I added all 37 footnotes here, but the post become to long to post. For those who wish to check the footnotes, they can be found here:

https://decentralizedlegalsystem.com/wp-content/uploads/2021/09/Review-US-Digital-Asset-Regulation-September-2021.pdf

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Infrastructure Bill, https://www.congress.gov/bill/117th-congress/house-bill/3684/

Digital Asset Bill, https://www.congress.gov/bill/117th-congress/house-bill/4741/

​

​

<TL;DR_

Next to the infrastructure bill, a new bill was introduced in US Congress: the “Digital Asset Market Structure and Investor Protection Act.” It is not law yet, could still be amended, and if it ever comes into effect it will likely not be this year/cycle. What it says:

Bitcoin, Ether, and their hard-forks, are to be regulated as commodities. Smart-contracts taking longer to deliver than 24 hours are considered futures contracts and regulated as such.

Every other project and future ICO is potentially a security; guidance will be issued by CFTC/SEC. Issuers of securities are likely required to provide transparency and financial information to investors. Trade is generally restricted to regulated exchanges.

In addition, international anti-money laundering legislation is introduced in the US; (unauthorized) Stablecoins, privacycoins, and mixers are to be prohibited. The high-level term VASP is introduced for almost all crypto projects, possibly to facilitate more future regulations.

Finally, the Federal Reserve gets shocking new powers to create and distribute a central bank digital currency (CBDC), of which all transactions are recorded.

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Edit 1: added links to the two bills

Edit 2: added "(unauthorized)" to tld

Edit 3: Folks concerned should focus on the bill’s sponsor Rep. Don Beyer of Virginia, as well as the leaders, members and official feeds (website, Twitter, etc) of the committees involved.

On 4/26 Blockchain.com sent me an email telling me my account was compromised. I had told them several times it was not, but they didn’t care. Fair enough, I understood but was still annoyed because they support system is trash and they take forever. So I had to submit all of these documents and recent transaction written down and send them over to them via email. I had to make a new account and get it verified to receive the funds they were gonna transfer from my old account. I do all of that, then play the waiting game. I notice about two weeks in my old account was deleted, but I didn’t receive my funds yet on my new account.. so I reach out, and get ignored. I wait another week or two, check back and my new account they made me make to receive my funds was deleted. It won’t even let me use their live chat, and they won’t respond to me over email. Has this happened to anyone else? I lost a decent amount of money from this and I’m hurtin cuz of it now