Around the world, regulators are trying to tackle the trillion-dollar “elephant in the room”: the digital asset market. Because cryptocurrency is a fledgling industry that currently exists primarily outside the legal framework and remains in dire straits, both inside and outside the industry seem to want clear guidelines and clear transparency to drive its development.
U.S. Senators Cynthia Lummis, Republican of Wyoming, and Kirsten Gillibrand, Democrat of New York, have sponsored a proposed crypto bill that aims to provide guidelines for the digital asset space. The 69-page bipartisan bill is comprehensive, covering multiple facets of the crypto market.
The most notable aspects of the proposal include:
Make cryptocurrency transactions of $200 or less tax-free.
Develop guidelines to distinguish cryptocurrencies as commodities or securities (under the bill, most will fall under the category of commodities).
Backing stablecoins with a 1:1 currency-to-money ratio, moving towards a direction of “100% payment of all stablecoin issuers’ reserves, asset types, and detailed disclosure requirements”.
Grants the CFTC exclusive spot market jurisdiction over cryptocurrencies defined as commodities.
List the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission as the main regulators of the digital asset industry.
Nick Donarski, founder and CTO of ORE System, said: “This bill is important because it is a step in the right direction towards legislation and definitions of ‘cryptocurrency’, what ‘cryptocurrency assets’ are and what regulation will look like step."
“But at the same time, like other cryptocurrency-related bills, it’s more likely that the bill will be broken up to gain enough support to pass.”
Empowering the Commodity Futures Trading Commission (CFTC)
“This bill is very informative and very exciting,” said Ken Goodwin, director of regulatory and institutional affairs at Blockchain Intelligence Group. He said that by authorizing the CFTC to regulate most digital assets, it sets a precedent, giving the agency access to more verification.
Goodwin has worked on Wall Street for over 20 years and has been working in the blockchain space for the past 8 years. Despite his background in traditional finance and cryptocurrency, he said he was surprised by the CFTC's positioning in the proposed bill.
"I would never doubt that (CFTC) was at the forefront of this; I would have thought the SEC would be the regulator on this."
"Even if this bill doesn't pass, people will be looking to the CFTC for guidance."
Regardless, U.S. agencies need to come together to decide how to classify and treat digital assets, whether as commodities, securities or intangible assets such as technology, Goodwin said.
“The bill’s attempt to cover everything is probably its biggest hurdle,” said Christopher LaVigne, co-chairman of Withers’ crypto practice. “It also fails to adequately address the biggest regulatory question facing companies in the crypto market: whether digital assets should be regulated as securities. I We do not believe this bill will change the SEC's position on digital assets as securities, nor will it withdraw its regulatory efforts in this area."
Is the bill a positive for the crypto industry?
While there are still many steps to go before the bill becomes law (or not), other market participants are optimistic.
“To me, that’s helpful — they’ve taken a deliberate approach that I’m sure the industry will largely support,” said Mark Fidelman, founder of SmartBlocks. “With clear rules, Individuals and companies can now develop blockchain solutions and tokens within one framework. Venture capital should now flow into the industry.”
Gabriella Kusz, CEO of the Global Digital Asset and Cryptocurrency Association, said the bill addresses insufficient or vague U.S. regulations governing digital assets. According to Kusz, it clarifies the need for digital asset companies to adapt to the U.S. legal and regulatory environment.
"It's not about escaping strong regulation, it's about moving to a jurisdiction with clearer rules," she said.
AscendEX venture capital partner Michael Rinko said that in addition to encouraging innovation, the bill will further bring cryptocurrencies into the regulatory framework, which will help more financial institutions to safely invest in cryptocurrencies as an asset class. “Governments have a vested interest in promoting security innovation, and the crypto industry stands to benefit enormously from smart regulation if done correctly.”
While it remains to be seen whether the bill (or parts of it) will pass, the crypto industry can take comfort that at least the current thinking is a measured and realistic approach, Fidelman said. "I can hear the whole industry breathing a sigh of relief now."
Article source:: Techcruch
https://techcrunch.com/2022/06/08/proposed-bipartisan-us-crypto-bill-could-be-sigh-of-relief-for-the-industry/
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