Cryptocurrency regulation took center stage as Republican lawmakers released a draft bill on Friday. Led by influential Republicans, Representatives Patrick McHenry and Glenn Thompson, the bill outlines a proposed framework for regulating digital assets.
While it is subject to revisions in the coming weeks and months, this bill carries significant weight in shaping the future of crypto regulation.
A pivotal aspect of the bill involves creating a clear division of responsibilities between the two largest financial regulators in the US – the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The bill provides insight into how the committee chairs envision the distribution of regulatory power among these agencies. This section aims to establish a comprehensive and coherent regulatory framework for the industry.
Cryptographic regulation challenges: division of power
McHenry, chair of the House Committee on Financial Services, and Thompson, chair of the House Committee on Agriculture, expressed concerns about current regulatory guidance related to digital currencies.
According to the Abstract draftThey believe that these guidelines hinder innovation and fail to provide adequate consumer protection.
The discussion draft provides a clear division of regulatory power between the two major financial regulators in the United States in what the industry likes to refer to as grass was.
Under the proposed bill, the CFTC would be given express authority over cryptocurrency commodities in the spot market, as per the existing law. On the other hand, the Securities and Exchange Commission (SEC) will be responsible for regulating digital asset securities.
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The bill includes provisions aimed at enhancing market access and flexibility. The SEC is expressly prohibited from banning an alternative trading system (ATS) from listing cryptocurrency securities.
Additionally, it requires the Securities and Exchange Commission to amend its rules to enable brokers and dealers to offer custody services for digital assets. These measures aim to create a more friendly environment for market participants and promote increased efficiency in the crypto space.
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future repercussions
In the wake of intense enforcement action that has prompted cryptocurrency companies and developers to move operations out of the United States, cryptocurrency exchanges have urged organizational clarity.
While the bill introduced by McHenry and Thompson remains subject to possible amendments and revisions, their proposal demonstrates a dedication to correcting current regulatory shortcomings surrounding cryptocurrencies.
By addressing these shortcomings, the bill has the potential to spur innovation, strengthen consumer protections, and establish more transparent guidelines for market participants working in the crypto space.
Positive initial industry response
Although the bill has not yet reached the formal introduction stage in the legislative process, initial industry reception on Friday afternoon was largely positive.
Market participants and cryptocurrency exchanges have welcomed the potential for greater regulatory clarity, which can provide stability, facilitate compliance, and encourage continued growth and development within the crypto sector.
Featured image by Shelly Palmer