- A game-changing cryptocurrency bill has been introduced by the U.S. Congress, providing regulatory clarity amidst the significant market surge of top digital currencies.
- The bill proposes a comprehensive regulatory framework that separates cryptocurrencies under SEC oversight and commodities regulated by the CFTC, depending on the decentralization of the underlying blockchain.
Amid the exhilarating price ascension of Bitcoin, Ethereum, Binance’s BNB, and Ripple’s XRP, adding an estimated $350 billion to the crypto market in 2023, U.S. lawmakers have made a crucial legislative move. In response to the potential cryptocurrency “powder keg,” a comprehensive “functional framework” has been proposed to deliver regulatory clarity for cryptocurrency companies within the United States.
The cryptocurrency bill, spanning 162 pages, has been unveiled by Patrick McHenry, a Republican from North Carolina chairing the House financial services committee, and Glenn Thompson, a Republican from Pennsylvania, presiding over the House agriculture committee. The legislators aim to instigate bipartisan discussions between the two committees, according to Bloomberg.
This move comes at a critical time when major U.S. crypto firms, including Coinbase, have been cautioning about the nation’s lagging behind in the crypto legislative landscape. They cited the recent activation of Hong Kong’s new regulatory mechanism and the Europe Union’s groundbreaking markets in crypto assets (MiCA) regulation.
Crypto exchanges have been embroiled in disputes with regulators over the unregistered securities status of certain cryptocurrencies. In late 2020, Ripple was sued by the U.S. Securities and Exchange Commission (SEC) for allegedly selling $1.3 billion in unregistered securities through its XRP cryptocurrency.
The newly proposed bill comes as the crypto industry braces itself for fears of an “operation choke point 2.0.” This term refers to an alleged coordinated effort to marginalize the bitcoin and crypto industry by U.S. government and bank regulators, mirroring a 2013 policy to lock high-risk industries out of the banking system.
The bill offers a clear demarcation of regulatory jurisdiction. Cryptocurrencies associated with investment contracts would fall under SEC oversight, while those classified as commodities would be regulated by the Commodity Futures Trading Commission (CFTC). This classification hinges on how decentralized the underlying blockchain of the cryptocurrencies is, a determination that will be made via an SEC ruling.
As the crypto industry examines the proposed bill in-depth, initial responses are positive. Paul Grewal, the chief legal officer at Coinbase, hailed the bill as laying a strong regulatory jurisdiction and definitions foundation. Crypto data company Messari’s founder, Ryan Selkis, remarked that it’s a win for crypto to gain this attention in Washington D.C., despite the previous year’s setbacks.