Republicans in the U.S. House of Representatives Patrick McHenry and Glenn Thompson of Pennsylvania released a draft bill on Friday.
Proposes a clearer division of cryptocurrency regulatory powers between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The bill seeks to provide regulatory certainty for digital asset firms.
The proposed legislation grants the CFTC jurisdiction over digital commodities and establishes the SEC’s jurisdiction over digital assets offered as part of investment contracts.
Additionally, the bill outlines the process for secondary market transactions of digital goods, provided they are initially offered as part of an investment contract.
Some other key provisions of the proposal include requiring token projects to be considered commodities to undergo the CFTC’s certification process, which includes detailed disclosures about their operations.
While the agencies collaborated to create joint regulations, the legislation ensures existing crypto assets are not subject to enforcement action, creating a safe harbor that allows companies and investors to continue trading while waiting for the SEC and CFTC to finalize new industry rules.
Additionally, the bill enables broker-dealers to take custody of crypto assets and calls for further research and advancement in the regulation of decentralized finance (DeFi) and non-fungible tokens (NFT).
The proposed bill, titled the “Cryptocurrency Regulatory Clarity Act,” aims to address the current regulatory ambiguity surrounding digital assets.
It aims to provide clear guidelines for market participants, enhance investor protection, and foster innovation in the cryptocurrency industry. By dividing regulatory powers between the SEC and CFTC, the bill seeks to create a comprehensive framework to promote transparency and confidence in the rapidly evolving crypto market.
While the SEC primarily oversees securities offerings and investment contracts in the cryptocurrency space, the CFTC has traditionally overseen commodity and futures contracts.
However, the rise of digital assets has blurred the lines between these regulatory jurisdictions, creating legal uncertainty for market participants. The proposed bill aims to close this regulatory gap and create a more coordinated and predictable environment for digital asset companies.
Patrick McHenry, a prominent advocate of blockchain and cryptocurrencies, emphasized the importance of regulatory clarity in fostering innovation and protecting investors.
He said, “As digital assets continue to gain prominence, it is critical to establish a clear regulatory framework that strikes a balance between consumer protection and fostering innovation. The Cryptocurrency Regulatory Clarity Act aims to address this issue by providing the industry with much-needed certainty.” achieve this goal”
Glenn Thompson echoed these sentiments, emphasizing the need for cooperation among regulators to address the unique challenges posed by the crypto ecosystem. “By clearly defining the responsibilities of the SEC and CFTC, we can better protect investors and lay the groundwork for future growth in this rapidly evolving space,” Thompson said.
The proposed bill has already garnered support from various industry stakeholders, including blockchain technology companies and cryptocurrency exchanges. Advocates argue that regulatory clarity will encourage responsible innovation, attract investment, and foster the development of a robust compliance framework within the cryptocurrency industry.
The Cryptocurrency Regulatory Clarity Act will now undergo thorough review and possible amendments before being brought to the House of Representatives for a vote. If passed, the bill could significantly change the U.S. cryptocurrency regulatory landscape, providing market participants with greater clarity and confidence while maintaining a balance between innovation and investor protection.