Senior Republicans in the US House of Representatives have released a draft of legislation that reclassifies cryptocurrencies as commodities.
The Digital Asset Market Structure Proposal was submitted by the Chairman of the House Financial Services Committee, Patrick McHenry, and the Chairman of the House Committee on Agriculture, Glenn “GT” Thompson.
Digital Asset Market Structure Proposal
The bill seeks to address several regulatory issues facing crypto and provide clarity for the industry. It also enables innovation and seeks to protect American crypto consumers.
Speaking on the bill, McHenry said:
“Our goal is to strike the appropriate balance between consumer protection and encouraging responsible innovation.”
McHenry urged market participants and stakeholders to provide constructive feedback to help improve the legislation.
Thompson corroborated McHenry’s statements, adding that the bill would help close the regulatory gaps between the financial regulators.
“This historic joint effort with the House Committee on Financial Services aims to close existing authority gaps between the CFTC and SEC and bolster US leadership in financial and technological innovation.”
The draft bill also gathered support from ranking House members, including the Chairman of the Subcommittee on Digital Assets, Financial Technology, and Inclusion, French Hill. According to Hill, the bill’s approach would bring “existing consumer and investor protections to digital asset-related activities and intermediaries under the principle of ‘same risk, same regulation.’
Another lawmaker supporting the bill is the Chairman of the Subcommittee on Commodity Markets, Digital Assets, and Rural Development, Dusty Johnson.
Key Features
The proposed legislation may finally end the debate on what is a security or commodity. It will require crypto firms to prove their tokens are commodities and are sufficient decentralization by establishing that no single entity controls more than 20%.
The bill also proposes that the Commodity Futures Trading Commission (CFTC) regulate Digital Commodities Exchanges. This will mean more regulatory oversight for crypto companies from the CFTC rather than SEC.
There is also mention of further regulations of decentralized finance and other future novel areas of the crypto economy. Other issues include custodianship requirements, anti-fraud authority for SEC, and joint advisory between SEC and CFTC.
Crypto Community Throws Weight Behind Bill
Many stakeholders within the crypto community have expressed support for the bill. Coinbase chief legal officer Paul Grewal described it as an encouraging bill, considering its definition of securities and commodities.
Gemini co-founder Tyler Winklevoss also called the proposed legislation a welcome development. Winklevoss said:
“It is important to provide thoughtful regulatory clarity for the continued responsible innovation of the crypto industry in the US.”
Several others pointed out that the bill clarifies many issues, including jurisdiction, registration, and stablecoins.
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