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Republican lawmakers Patrick McHenry and Glen Thompson have introduced a draft bill proposing clear roles and delineation of authority between the SEC and CFTC regarding crypto.
A Clearer Regulatory Plan
The draft bill, released on Friday, provides crypto assets and exchanges a clearer regulatory plan, enabling the trading of digital assets on more conventional trading platforms. It also seeks to introduce a division of authority between the two top US financial regulators. The draft, published on the 2nd of June, 2023, proposes establishing a functional framework that provides regulatory clarity for cryptocurrency firms and exchanges operating in the United States.
“Key House Republicans Unveil Crypto Market Structure Draft Bill The draft legislation was unveiled today by House Financial Services Committee Chairman @PatrickMcHenry and House Agriculture Committee Chairman @CongressmanGT.”
The bill would prohibit the United States Securities and Exchange Commission (SEC) from denying digital asset trading platforms from registering as a regulated alternative trading system. It would also allow the firms in question to offer payment stablecoins and digital commodities. The bill cracks down on the much-criticized approach of the Securities and Exchange Commission, which does not offer any clear rules or roadmap for the crypto space.
Under the bill’s framework, specific digital assets could qualify as digital commodities if they were functional and considered decentralized assets. It would also require the SEC to provide a complete and detailed analysis of any objections against the classification of a firm as decentralized. The draft states,
“The Act also requires the SEC to modify its rules to allow broker-dealers to custody digital assets if they meet certain requirements. Additionally, the Act would require the SEC to write rules to modernize certain regulations for digital assets.”
Crypto Space Lauds Draft Bill
The crypto space praised the bill and initiative. Paul Grewal, Chief Legal Officer at Coinbase, stated that the draft bill lays a strong foundation for regulatory jurisdictions and definitions. However, he added that the bill needed an in-depth review before being formally introduced. Coinbase has recently launched a pro-adoption ad campaign as it looks to attend a lobbying-focused event to be held in Washington DC, in July.
However, the bill was introduced by Republican lawmakers and lacks any input from the Democrats. Both Democrats and Republicans have, at times, shown a willingness to take a bipartisan approach to crypto regulation. It is not clear how the proposed legislation would perform in a highly divided Congress. The US House and Senate have recently passed legislation that would stop the government from going into default. The legislation raises the debt ceiling, with President Biden expected to sign the bill into law by the 2nd of June.
SEC vs. Crypto
Cryptocurrency exchanges operating in the United States have long been calling for regulatory clarity as they grapple with enforcement action from regulators. As a result, many are moving to shift operations outside the United States of America. Prominent exchanges such as Gemini and Coinbase have announced off-shore operations. Coinbase is also locked in a courtroom battle with the Securities and Exchange Commission after it received a Wells notice earlier in the year. A Wells notice is a warning of impending enforcement action.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.