In a recent development, House Financial Services Committee Chairman Patrick McHenry and House Agriculture Committee Chairman Glenn “GT” Thompson shared details of draft legislation on digital assets.
The proposed bill focuses on securities or commodities within the BTC 0.41%-and-other-digital-assets/">digital asset space and highlights existing exemptions for private securities as well as the introduction of new bespoke exemptions. A notable feature of the draft bill is the creation of the CFTC-SEC Joint Advisory Committee on Digital Assets.
Draft legislation introduced in the U.S. House of Representatives seeks to exempt issuers of digital assets sold under securities laws, provided certain conditions are met:
The total amount of digital assets sold by the issuer in the past 12 months does not exceed US$75 million.
Non-accredited investors have purchased less than 5% of their annual income or net worth, whichever is greater, in digital assets from the issuer in the past 12 months.
Buyers of digital assets hold no more than 10% of the total post-trade asset supply.
The transaction does not involve equity or debt securities.
Under current securities laws, digital commodities and payment stablecoins are excluded from the definition of securities. However, the U.S. Securities and Exchange Commission (SEC) is expected to issue rules allowing records to be kept on digital ledgers.
While not explicitly mentioned in the current draft bill, non-fungible tokens (NFTs) require further investigation under the purview of the Department of Commerce.
In order to increase regulatory transparency and provide a framework for the evolving digital asset landscape, the proposed legislation seeks to strike a balance between investor protection and innovation.
The creation of the CFTC-SEC Joint Advisory Committee on Digital Assets will bring together the expertise of the Commodity Futures Trading Commission (CFTC) and the SEC to foster collaboration and facilitate informed decision-making regarding digital assets.
The potential impact of this legislation is far-reaching, as it addresses the growing regulatory needs of the digital asset market. The draft bill reflects an acknowledgment of the transformative potential of digital assets, while acknowledging the need to protect investor interests and promote market integrity.
Industry stakeholders expressed support for the proposed legislation, emphasizing the importance of regulatory clarity and a comprehensive framework that can accommodate the unique characteristics of digital assets.
The formation of the CFTC-SEC Joint Advisory Committee on Digital Assets is seen as an important step towards this goal, as it will allow regulators to leverage industry expertise and keep pace with technological advancements.
