Following a U.S. congressional hearing on cryptocurrencies, a leaked internal memo circulating among Democratic members of the House Financial Services Committee shows that they advocate for the U.S. Securities and Exchange Commission (SEC) to be the primary regulator for cryptocurrencies.
According to Ron Hammond, director of government relations at the Blockchain Association, the proposal did not receive support from a majority of Republicans on the committee, who instead favored commodity futures for cryptocurrencies including bitcoin and ethereum. Commodity spot markets are subject to interim oversight by the Commission on Trade (CFTC).
Republicans also support Congressional involvement in defining digital securities and commodities. Meanwhile, most Democrats insist that most tokens should be classified as securities.
The proposal is still in its early stages, and the Republican committee has yet to formally submit a bill on stablecoins.
Still, if the Democrats’ proposal is implemented, it would be an important step toward clarifying the cryptocurrency regulatory landscape and potentially bringing the industry closer to the SEC, the primary U.S. securities regulator.
Some cryptocurrency experts have expressed concern about the SEC’s ability to regulate the crypto market, which is still evolving and poses unique challenges.
However, proponents of the proposal argue that bringing the market under the SEC’s jurisdiction would provide greater protection for investors and help establish clearer and consistent rules for digital assets.
Regulatory transparency has become an increasingly pressing issue in the wake of recent high-profile controversies surrounding cryptocurrencies, including the debacle of certain stablecoins and the use of encryption in ransomware attacks.
The proposal is just one of many discussions and debates surrounding digital asset regulation in the U.S. and around the world.