In an attempt to address the pressing need for adequate regulations in the rapidly evolving world of cryptocurrency and digital assets, US House Republicans unveiled a revised Financial Innovation and Technology for the 21st Century Act. The bill, introduced by the House Committees on Agriculture and Financial Services, aims to establish a comprehensive regulatory framework that safeguards investors while fostering American leadership in the digital asset space.
Rep. Glenn Thompson, Chairman of the House Committee on Agriculture, expressed enthusiasm about the bill, highlighting its potential to provide much-needed protection for consumers and investors in the crypto sector. With a wave of aggressive enforcement actions and regulatory deficiency, the new legislation seeks to instil confidence and stability in the US crypto market, encouraging established crypto businesses to stay in the US and promoting a favourable environment for startups.
One of the primary objectives of the bill is to create a clear regulatory path for crypto exchanges to register with the US Securities and Exchange Commission (SEC). By doing so, these exchanges would gain the ability to trade digital securities, commodities, and stablecoins all within a single platform, as well as avoid spontaneous crackdowns and lawsuits from the SEC. The goal is to simplify the compliance process for businesses operating in the notoriously hostile US digital asset space.
A key feature of the bill involves granting both the Commodity Futures Trading Commission (CFTC) and the SEC seats at the table when it comes to discussions around the regulation of the crypto industry, instead of creating a separate commission better suited for the industry. Both commissions have expressed their beliefs of redundancy when it comes to creating regulations tailored specifically for the crypto industry, choosing instead to reinforce their law as defined in regards to stocks, bonds, and transferable shares.
Speaking of, the revised version of the bill has already raised concerns by excluding these traditional securities from the definition of “digital assets.” While this may aim to clarify regulation for some assets, it may inadvertently result in stringent regulation for assets found in the decentralised finance (DeFi) market, such as Compound’s cTokens or Liquid Collective’s Liquid Staking Tokens. In the end, the SEC could still wield authority over certain assets based on how they interpret the exclusion of traditional securities from the definition of digital assets, leading to continued uncertainty and regulatory challenges for the industry.
The introduction of the Financial Innovation and Technology for the 21st Century Act represents an important step towards establishing much-needed regulatory clarity in the crypto sector, but leaves much to be desired. An industry like this requires an adequate and informed approach, as well as an ability to understand new concepts as the market continuously evolves. Will the US government be able to deliver such a thing?
