Since 2022, there has been a proliferation of digital asset bills in the United States Congress. These proposed regulations aim to provide comprehensive coverage for many aspects, from stablecoins to regulatory jurisdictions. Yet, four bills stand out as potential game-changers in the industry due to their considerable attention from lawmakers and industry stakeholders.
Establishing Crypto Regulation Frameworks with the Digital Asset Market Structure Bill
The Digital Asset Market Structure Bill seeks to articulate the crypto-related roles of the SEC and CFTC and establish a solid framework for these regulators to determine cryptocurrencies’ status. It has drawn significant attention, as demonstrated by Representative Maxine Waters’ letters to Treasury Secretary Janet Yellen and SEC chair Gary Gensler requesting their views on the bill.
Under this proposition, a crypto token would need SEC certification to prove its adequate decentralization before being granted commodity status. This bill also allows crypto exchanges to register with the SEC as an alternative trading system (ATS). The regulator couldn’t deny registration based on a platform’s digital asset trading operations.
The Financial Innovation and Technology for the 21st Century Act
The Financial Innovation and Technology for the 21st Century Act signifies a monumental stride forward in crypto regulation. Crafted by Republican members from the Agriculture and Financial Services Committees of the US House, its purpose is to define whether a digital asset qualifies as a commodity or a security. The aim? To provide much-needed clarity on the jurisdictions of significant regulators.
This crypto regulation proposal promises to empower the Commodity Futures Trading Commission (CFTC) with oversight over digital commodities. Simultaneously, it delineates the Securities and Exchange Commission (SEC) jurisdiction. As a bonus, the act provides a mechanism for crypto assets previously tagged as securities to transition into commodities. The result could resuscitate several projects that past legal judgments had stymied.
The Responsible Financial Innovation Act
Moving forward, we find the Responsible Financial Innovation Act, which seeks to crystallize the roles of the SEC and CFTC in crypto regulation. This act goes beyond simple regulatory clarification. It aims to enhance consumer protection laws to prevent any recurrence of events akin to the FTX debacle.
Additionally, the act outlines digital asset tax treatment and orders the Federal Reserve to process bank applications from crypto firms equitably. It restricts the issuance of stablecoins to depository institutions alone and makes space for decentralized autonomous organizations (DAOs) in the tax code. This act promises to keep the industry in check with regular reports and the formation of an advisory committee.
The Digital Commodity Exchange Act
Finally, the Digital Commodity Exchange Act is worth noting. First introduced in September 2020 and revised in April 2022, this act stipulates that stablecoin providers could register as a “fixed-value digital commodity operator,” with included recording and reporting requirements.
This groundbreaking act allows the CFTC to regulate spot exchanges, equating them with other commodity exchanges. In the process, the act redefines cryptocurrencies not considered securities as digital commodities, while the SEC would oversee crypto securities offerings.
Navigating the Crypto Regulation Seas
The dynamic landscape of crypto regulation remains as complex as ever, with numerous crypto bills passing through Congress. The Stablecoin TRUST Act and the Stablecoin Innovation and Protection Act aim to regulate stablecoins.
Navigating these developments is daunting, but CryptoMode will keep our finger on the pulse of this ever-evolving industry, providing updates as they unfold.
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