- June 5, 2023
- Posted by: [email protected]
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Representatives from the United States House Financial Services Committee and the House Agriculture Committee recently released an early discussion document outlining a potential regulatory framework for certain types of cryptocurrencies. The proposed legislation’s goal is to create clear principles and regulatory clarity for crypto-related enterprises operating in the United States. The measure seeks to overturn the Securities and Exchange Commission’s (SEC) earlier stance on bitcoin regulation.
According to the draft, the legislation intends to create a functional framework that would enable digital asset trading platforms to register as regulated alternative trading systems. This would prohibit the SEC from denying these platforms the opportunity to operate as regulated entities. Furthermore, the bill would grant these platforms the ability to offer “digital commodities and payment stablecoins.”
The absence of clear standards and direction, according to critics of the SEC’s approach to cryptocurrency regulation, has hampered the industry’s development. The proposed legislation addresses this issue by establishing explicit criteria for classifying some digital assets as digital commodities. These assets must be considered decentralized and functional in order to qualify. Additionally, the SEC would be required to provide a detailed analysis if it objected to a firm’s classification as decentralized.
The draft bill also includes provisions that would enable broker-dealers to custody digital assets, subject to certain requirements. It further mandates the SEC to modernize existing regulations pertaining to digital assets by drafting updated rules.
The Chief Legal Officer of Coinbase, Paul Grewal, expressed support for the draft bill, emphasizing that it lays a solid foundation for regulatory jurisdiction and definitions. However, he also highlighted the need for a thorough review before formal introduction. Coinbase recently launched an advertising campaign aimed at promoting crypto adoption in anticipation of a lobbying-focused event scheduled for July in Washington, D.C.
The legislation was introduced by Chairpersons Patrick McHenry from the House Financial Services Committee and Glenn Thompson from the House Agriculture Committee, both of whom are Republicans. Notably, the draft did not incorporate input from lawmakers on the Democratic side. While there have been instances of bipartisan cooperation in crypto regulation, the fate of this proposed legislation in a divided Congress remains uncertain.
It is worth noting that, at the time of this publication, U.S. lawmakers in both the House and Senate had passed legislation to prevent the government from defaulting on its debt by raising the debt ceiling. President Joe Biden is expected to sign the bill into law on June 2.
