House Republicans have unveiled a draft of a sweeping discussion on regulating cryptos and digital assets.
The senior Republicans on the House Financial Services and Agriculture Committees unveiled the measure on Monday. Those include Reps. French Hill (Arkansas), Bryan Steil (Wisconsin), Glenn “GT” Thompson (Pennsylvania) and Dusty Johnson (South Dakota).
The draft precedes a critical hearing set for Tuesday, entitled “American Innovation and the Future of Digital Assets: A Blueprint for the 21st Century. Legislators are expected to discuss the future of digital assets in the United States and the best way to regulate the nascent industry.
Hill said they had made historic progress during the 118th Congress in building bipartisan and bicameral agreements to create a workable regulatory framework for digital assets. He added that the new discussion draft builds on that foundation and offers much-needed clarity for the digital asset industry by protecting consumers and ensuring the long-term stability of digital asset markets in the United States.
The bill is an offspring of the Financial Innovation and Technology for the 21st Century Act (FIT21), which passed the House last year. That earlier bill sought to determine which agency — the SEC or the CFTC — would have a purview of different aspects of the crypto space.
Lawmakers clarify regulatory duties for SEC, CFTC
One of the most significant elements of the new proposal is how it delineates the roles of the SEC and the Commodity Futures Trading Commission.
The bill would establish a structure that would divide oversight according to the form and function of a digital asset.
If a digital asset is decentralized and in operation — like Bitcoin, for example — it would be considered a digital commodity. That makes it subject to the CFTC.
Then, the SEC would have jurisdiction if such a token is not decentralized or if it is still under an issuer’s control.
This would address one of the main issues with U.S. crypto regulation, uncertainty. Businesses and developers complain that they don’t know which agency to register with or how their projects will be handled.
The draft provides a “clear path” for companies to register with either authority. It also contains provisions on how such exchanges that handle digital commodities would be registered and function under the watchful eye of the CFTC.
A one-page summary of the bill states that it also permits digital asset projects to raise funding under SEC rules while eventually providing a path to register as a commodity under the CFTC.
House committees hold hearing on crypto oversight draft
The House hearing on Tuesday is likely to be a significant step. It will be held by two subcommittees: the Agriculture Subcommittee on Commodity Markets, Trading and Credit and the Financial Services Subcommittee on Commodity Exchanges, Energy and Credit.
Lawmakers will likely question experts, regulators, and industry executives about what the bill may mean for innovation and safety in digital markets.
So far, participants in the crypto industry have been excited about the promise of a regulatory framework for their operations. Many deemed this bill a great first step, although some warn that it may open loopholes or create new issues.
Its advocates have also said it could help the United States compete worldwide. Other nations, including the U.K. and E.U., have already implemented clear rules of engagement for crypto. The U.S. is falling behind.
However, critics argue that enhancing the CFTC’s authority might be a consumer loss, as the agency has historically favored the markets over the protection of investors.
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