On April 4, US President of the House Committee on Financial Services French Hill (R-AR) and Glenn Thompson (R-PA), chairman of the House Committee on Agriculture, on-ed With its vision for legislation on digital asset market structure.
Legislators described six core principles that they believe must be included in Digital asset legislationIncluding giving clarity for the classification of assets, determining the regulation of spot market exchanges and intermediaries and introducing rules that are specific to decentralized units.
The up-ed kicked off with one Short history of digital assetsGo back to Satoshi Nakamotos 2008 White book with bitcoinafter which the Republican Congress Members indulged in criticism of digital asset policy during the Biden-Harris administration and regretted Securities and Exchange Commission (Sec) to “clarify how existing existing existing securities laws Apply ”under the former chairman Gary Gensler.
“This lack of regulatory clarity suffocated the digital asset ecosystem and drove growth from the United States to jurisdictions that have established clear rules for the road,” the legislators said.
To address these perceived failures, they added, “Congress began to explore ways to modernize the regulatory structure to meet the unique properties of digital assets and how they could be used in our financial system.”
To back up this, OP-Ed pointed to a “historical joint effort to manage digital asset regulation” that was launched in the 118th congress of the House Committee for Financial Services and Agriculture. Specifically the passage of Financial innovation and technology for the 21st century (Fit21).
Fit21 passed a full house voice 279-136 in May last year And, among other things, aims to clarify which authorities will be responsible for monitoring specific symbols and digital asset platforms. Fit21 would increase the Commodity Futures Trading Commission (CFTC) surveillance role at the expense of the highly criticized-mainly by Republicans—Sec.
The bill is now in the Senate, where it has been referred to the committee for banking, housing and city issues. This is as far as any significant digital asset -related legislation has done so in the United States, and it still has to survive Senate debates and changes and get the president’s approval, not a quick process.
Nevertheless, increased regulatory clarity is undoubtedly to everyone’s advantage, and in order to build on the baby steps from Fit21, reps decided. Hill and Thompson to determine their principles for “balanced and iron -clad” digital asset legislation.
Six principles
The six principles range from general positions to dealing with specific issues or points in the digital asset space.
First on the list was that “Legislation must promote innovation. “
This is very much the Republican party line that benefits – which they have traditionally tended to do – innovation over Consumer protection. Congress members said they would “try to protect opportunities for innovators to create and use digital assets while users can legally trade with each other.”
The second principle was that “Legislation must provide clarity for the classification of assets. “
A certain bugbear of Republicans and often a fight with supervisory authorities has been how to classify digital assets, which is a wide category that covers everything from MemecoinsThe Non-fungible tokens (Nfts) and tool tokens, to Stablecoins and Central Bank digital currency (CBDC).
A variety of factors can affect how one of these assets is seen and classified, including how it is issued and who the issuer is, control of blockchainHow it is advertised and how its value changes. All these factors and more can determine whether it is an item or security according to the law and despite Some do the persuasive case that almost all of the “crypts” are securities, there is enough ambiguity to result in many controversial decisions and moods.
For this reason, the second principle is the key for legislators, which claims that “users of digital assets should clearly understand the nature of their holdings, including if they qualify as securities or non-security.”
Third, ”Legislation must codify a framework for issuing new digital assets. “
In the same way that protects innovation, this principle expands in a specific area where legislation can develop this cause while having a disclosure consent to consumer protection.
“The framework should allow issuers to raise capital through the sale of new digital assets under Sec’s jurisdiction,” OP-Ed said. “It should protect retail investors and require developers to reveal relevant information to help users understand the unique characteristics of digital asset networks.”
Fourth up was that ”Legislation must determine the regulation of spot market exchanges and intermediaries. “
Congress members suggested that centralized, custody exchange and intermediaries that facilitate transactions with “non-safety digital assets” would comply with the requirements similar to other financial companies.
“Congress should provide Commodity Futures Trading Commission (CFTC) with authority to set requirements over these units necessary to protect customers, limit conflicts of interest, ensure the appropriate implementation of customer orders and provide disclosures,” the legislators said.
That those who deal with non-security assets are covered by CFTC, with the same rules and KRAV-or similar-as other assets, seems to be a fairly obvious and non-controversial point; The debate comes when deciding which assets are classified as “non-security.”
Fifth, ”The legislation must set up the best practice to protect customer assets. “
A little break rank with the general “pro -business” theme for the principles, in this more consumer protection -focused commitment, the congress members suggested that units registered with SEC or CFTC would be required to “separate customer funds and keep them with qualified custodians.”
In addition, the legislators allowed that customer funds should be protected during bankruptcy.
Finally, the sixth principle was that ‘Legislation must protect innovative decentralized projects and activities. “
Whether rep. Hill and Thompson are fans of full circle symmetry, wanted to double their main point or simply ending ideas but thought that six principles sounded better than five; The sixth and last point is essentially an extended repetition of their first, that legislation must promote innovation.
Add a little more detail, said the legislators: “Congress should ensure that decentralized protocols, which constitute different risks and benefits, are not subject to regulations designed for centralized, custody companies.”
A focus on shelter Decentralized funding (Defi) Activities are a potentially important inclusion –Although protection of digital assets, decentralized or otherwise, was undoubtedly covered by their first principle-as decentralization or pseudo-decentralizationis a unique feature of many blockchain and digital asset projects that have caused problems for supervisory authorities and legislators in the past, as well as for consumers, when something goes wrong.
Authorities and courts have increasingly found new ways of dealing with the new challenges such as “decentralized units”, including “, including An American judgment that institutional investors in a decentralized autonomous organization (DAO), Lido DAO, could be held responsible for measures from the decentralized governing body; and CFTC’s unconventional move To issue summons to Ooki Dao members through an auxiliary chat.
It is unclear and not addressed in OP-Ed, if Hill and Thompson had their thoughts on eliminating these routes to legal opportunity so that decentralized units can renew anxious or if they hope to formalize such methods in legislativeBased on the overall tenor of the principle it is fair to say probably not the latter.
As part of the Principle Six, the Republican legislators added that “Congress must also protect an individual’s right to self -store their digital assets.”
OP-Ed ended with a nod to Crypto’s head of manager, President Trump, as Congress members said they are looking forward to the house’s financial services and the house’s agricultural committees that continue to work together to fulfill Trump’s goal to make the US “crypt capital on the planet.”
In May, committees will host the second joint hearing to discuss legislation on digital asset market structure.
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