A recently released draft bill by Republican lawmakers, spearheaded by Reps. Patrick McHenry and Glenn Thompson, outlines a proposed framework for regulating digital assets. Crypto regulation has been a major point of concern, and this bill could significantly shape its future.
The bill aims to establish clear responsibilities between two major US financial regulators, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). This would create a comprehensive and cohesive regulatory framework for the industry.
Challenges in Crypto Regulation: Regulatory Authority Division
McHenry, chair of the House Committee on Financial Services, and Thompson, chair of the House Committee on Agriculture, have expressed their concerns about the regulatory guidelines surrounding digital currencies in the draft summary. They believe that the existing guidelines hinder innovation and fail to provide adequate consumer protection.
The proposed bill would provide a clear division of regulatory responsibility between the CFTC and the SEC. According to the plan, the CFTC would be responsible for regulating digital currency commodities in the spot market, while the SEC would regulate digital-asset securities.
The plan includes provisions that aim to enhance market accessibility and flexibility. It prohibits the SEC from intervening in an alternative trading system from listing crypto securities. Additionally, the SEC must modify its rules to enable broker-dealers to provide custody services for digital assets. The ultimate goal is to create a more favorable, transparent and efficient environment for market participants in the crypto sphere.
Future Implications
The draft bill could rectify the existing regulatory deficiencies surrounding cryptocurrencies, driving innovation while enhancing consumer protection.
The initial response from the industry has been positive, as the bill has the potential to offer greater regulatory clarity, increase stability, facilitate compliance, and encourage growth and development within the crypto sector.
-Featured image from Shelly Palmer
