Republican lawmakers in the House unveiled a preliminary bill on June 2 that aims to provide clear guidelines for regulators in the fast-growing cryptocurrency industry.
One of the main goals of this bill is to distinguish between regulation of cryptocurrencies as a security and regulation of cryptocurrencies as a commodity. This will prevent the US Securities and Exchange Commission (SEC) from treating payment stablecoins and digital commodities as securities, allowing for more flexible oversight.
Under the proposed rules, the SEC will no longer be able to deny exceptions to certain trading platforms based solely on their digital asset offerings. Activities such as providing wallets, issuing software, and operating nodes, which are considered “additional activities,” will be exempt from SEC regulation. However, the SEC will still maintain anti-fraud authority over certain crypto commodity transactions.
Instead, the draft law would give the Commodity Futures Trading Commission (CFTC) new powers over digital commodity cash and spot markets. The CFTC will have authority over transactions involving payment stablecoins and digital commodities on registered platforms. However, the CFTC will have no control over the design and operation of these stablecoins.
To ensure compliance, the bill outlines requirements for digital commodity exchanges registering with the CFTC and establishes a process for determining eligible assets on these platforms. Additionally, the CFTC may set standards for digital asset custodians but will not regulate them directly.
To encourage collaboration and coordination, the proposal suggests establishing a joint advisory committee between the CFTC and the SEC and establishing other regulatory groups as well as conducting initiatives and studies.
The sponsor of the bill, Representative Patrick McHenry, views this draft as a significant step towards establishing clear regulatory guidelines. He stressed the importance of striking a balance between consumer protection and promoting responsible innovation in the cryptocurrency space.
The bill resulted from a collaboration between the House Financial Services Committee, chaired by Representative McHenry, and the House Agriculture Committee, chaired by Representative Glenn Thompson. Representatives for French Hill and Dusty Johnson also supported the bill.
This legislative proposal addresses various regulatory debates in recent months, including expanding exchange rules to cover non-exchange services and developing custodial requirements. In addition, it aims to address the differences in the regulatory roles of the CFTC and the SEC.
Although the bill is still in its early stages, it has yet to receive any feedback from Democratic lawmakers.