The U.S. Senate is working on a draft bill shifting digital assets initially classified as securities to be regulated as commodities.
The proposed legislation presents a pathway for the regulation of digital assets, providing clarity and consistency in the evolving landscape of cryptocurrencies.
The bill takes a new view on digital assets
The bill on market structure serves as an initial point of discussion for Republicans and Democrats from the House committees, along with the Senate, regulators, and the private sector.
By design, the bill intends facilitate comprehensive and collaborative conversations regarding market structure reforms, addressing the needs and concerns of various stakeholders.
The proposed legislation defines the criteria for a network to be considered decentralized, including the absence of unilateral authority or substantial ownership by a token issuer or affiliated person.
The bill allows token issuers to certify decentralization to the SEC, but the agency retains the power to object within a 30-day timeframe, with a possible 90-day extension.
This draft bill comes two months after the SEC chair Gary Gensler emphasized the need for these platforms to adhere to existing regulations. He specifically highlighted the importance of compliance with either the securities laws or the regulations set by the Commodity Futures Trading Commission (CFTC) when engaging with U.S. investors.
Democrats share this view, while the crypto industry argues for clearer and more feasible rules, urging the U.S. Congress to intervene.
The draft bill, introduced by Republican chairs, provides guidance on platform registration with the SEC, CFTC, or both. Additionally, it mandates the two regulators to collaborate on defining and overseeing exchanges that are dually registered.
Providing regulatory clarity
During this transition period, platforms would have the opportunity to file a provisional registration statement with either the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
The provision aims to provide regulatory clarity and allow platforms to continue operating while adhering to evolving regulatory requirements.
The proposed legislation in the U.S. comes at the same time as the European Union (E.U.)’s official signing of the Markets in Crypto-Assets (MiCA) rules into law, another comprehensive regulatory framework for the cryptocurrency industry.
In preparation for the framework, the E.U. Parliament highlighted a study suggesting crypto assets should be treated as securities by default, a stance that lines up closely with policymakers in the U.S.