Members of the US House of Representatives Republican Committee Introducing the Joint Digital Asset Bill

In a significant move, Republican members of the United States House of Representatives Committee on Agriculture and Financial Services have jointly introduced a 212-page bill called “Financial Technology and Innovation for the 21st Century Act.” This comprehensive legislation, launched on 20 July, aims to create a robust regulatory framework for digital assets and address the specific risks associated with various digital asset-related activities.

Under the proposed bill, the Commodity Futures Trading Commission (CFTC) will be given jurisdiction over digital commodities, while the Securities and Exchange Commission (SEC) will clarify its jurisdiction. In addition, a structured process will be created for digital assets that are initially considered securities to be sold as commodities.

To be considered a commodity, digital assets must meet certain requirements, with decentralization being the main requirement. These digital asset commodities will be eligible for sale on SEC registered digital asset trading systems. To increase transparency and accountability, market participants will face new and comprehensive disclosure requirements, potentially requiring registration with the CFTC and SEC.

Additionally, the bill emphasizes collaboration between US regulators and their international partners to create consistent regulatory standards. To gain a deeper understanding of non-fungible tokens (NFTs) and their impact on traditional markets, the Government Accountability Office will conduct studies as required by law.

Prior to the bill’s introduction, Representatives French Hill and Dusty Johnson, both cosponsors of the bill, sent a letter to SEC Chair Gary Gensler, expressing concern about the agency’s approach to regulating the crypto industry through “regulation with enforcement.”

The bill’s introductory materials highlight the need for an explicitly drafted regulatory regime for digital assets, as the SEC’s current framework lacks the clarity necessary for these entities to operate effectively.

The Financial Innovation and Technology for the 21st Century Act offered additional sponsors, including Glenn Thompson, Tom Emmer, and Warren Davidson. The two DPR committees collaborated extensively on this bill, holding several joint meetings throughout the year to refine its provisions.

The introduction of this bill comes amid growing interest in regulating the cryptocurrency market, and will compete with the bipartisan Responsible Finance Innovation Act recently introduced by Senators Cynthia Lummis and Kirsten Gillibrand.

As the digital asset market continues to evolve, the proposed regulatory framework aims to provide greater certainty, oversight, and protection for investors and market participants, signaling a significant step forward for the crypto industry in the United States.