The United States is on the brink of regulatory reform in the digital assets industry.
A significant step towards digital asset regulation in the US is the launch of a joint legislation proposed by Republican members of two influential House committees: the Agriculture and Financial Services Committees.
The proposed regulatory bill, the Financial Innovation and Technology for the 21st Century Act, was introduced on July 20th.
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Spanning over 200 pages, this comprehensive legislation aims to address the unique set of risks associated with different activities in the digital assets sector.
The legislation clarifies the role of the Securities and Exchange Commission and grants the Commodity Futures Trading Commission jurisdiction over digital commodities. Furthermore, it establishes a mechanism allowing digital assets, initially categorized as securities, to transition into commodities that can be sold in the market.
According to one of the bill’s introductory materials:
The SEC's existing regulatory regime is not designed to accommodate the registration and regulation of digital assets. The SEC has failed to provide the clarity these entities need to operate.
The bill also unveils the conditions for a digital asset to qualify as a commodity. One of the key requirements to treat crypto as a commodity is its underlying decentralization. The legislation also introduces more exhaustive disclosure requirements for market participants.
Moreover, the proposed law encourages the relevant regulatory bodies to coordinate with international regulators to establish uniform regulatory standards. It also mandates the Government Accountability Office to study the non-fungible tokens' (NFTs) role in conventional marketplaces.
On the eve of the bill's unveiling, Representatives French Hill and Dusty Johnson, who are among the bill's cosponsors, sent a letter to SEC Chair Gary Gensler. The letter expressed criticism of the SEC's method of “regulation by enforcement" in the crypto industry.
The Republican representatives' proposed legislation signifies a turning point in the US digital assets industry. By aiming to provide clear regulations and better oversight, it seeks to guide the sector toward a future of sustainable and structured growth.
