On June 2, Republican House members released a draft bill that aims to establish clear roles for regulators in the cryptocurrency industry. The proposed rules would separate the regulation of cryptocurrencies as securities from the regulation of cryptocurrencies as commodities. The bill is a joint effort between the House Financial Services Committee, chaired by Rep. Patrick McHenry, and the House Agriculture Committee, chaired by Rep. Glenn Thompson.
Details of the draft bill
The draft bill outlines several measures to regulate the cryptocurrency industry. One of these measures is to prevent the US Securities and Exchange Commission (SEC) from treating payment stablecoins and digital commodities as securities. The rules would also stop the SEC from denying exemptions to certain trading platforms simply because they offer digital assets. The bill would allow for “ancillary activities” such as wallet provision, software publishing, and node operation to be exempt from SEC regulation.
The proposed rules would require the SEC to modernize and change its rules for customer protection, record-keeping, and digital assets. However, the SEC would still have anti-fraud authority over some transactions involving crypto commodities. Parties that register with the SEC but offer cash and spot markets would be required to register with both the Commodity Futures Trading Commission (CFTC) and SEC.
The bill would give the CFTC new authority over digital commodity cash and spot markets, including transactions involving payment stablecoins and digital commodities on platforms that register with it. However, the CFTC would have no control over the design and operation of those stablecoins. The bill sets out requirements for digital commodity exchanges that register with the CFTC, as well as a process by which services can determine what assets are eligible for trading on registered platforms. The bill also allows the CFTC to set requirements for digital asset custodians but does not let the CFTC directly regulate those custodians.
The bill proposes to establish a joint advisory between the CFTC and SEC, regulatory groups and carry out initiatives and studies.
Rep. Patrick McHenry said that the bill is a “step toward … clear rules of the road.” He added that the bill aims to find a balance between “consumer protection and encouraging responsible innovation.” However, the bill is in an early stage and has not received feedback from Democrat lawmakers.
The draft bill seeks to establish clear regulatory roles for the cryptocurrency industry. It would separate the regulation of cryptocurrencies as securities from the regulation of cryptocurrencies as commodities and give the SEC anti-fraud authority over some transactions involving crypto commodities. The bill would give the CFTC new authority over digital commodity cash and spot markets, including transactions involving payment stablecoins and digital commodities on platforms that register with it. While the bill is still in its early stage and has yet to receive feedback from Democrat lawmakers, it represents a joint effort between the House Financial Services Committee and the House Agriculture Committee to find a balance between consumer protection and encouraging responsible innovation in the cryptocurrency industry.