Congressional Committee to Vote on Crypto Regulation Bills This Week

John Lopez, Tech Times 26 July 2023, 12:07 pm

In a significant step towards providing regulatory clarity for the cryptocurrency industry, a key congressional committee is gearing up to vote on several bills to develop a regulatory framework for digital assets.

Reuters reports that the House Financial Services Committee is set to consider these bills on Wednesday and Thursday, with significant implications for the entire crypto space.

Crypto: Security or Commodity

The proposed legislation includes a bill defining whether a cryptocurrency should be classified as a security or a commodity. This determination is crucial, as it will profoundly impact the regulatory requirements and investor protections applicable to various digital assets.

TechCrunch notes that the US Commodity Futures and Trading Commission (CFTC) classifies cryptocurrency as a commodity. In a complaint against Binance and its CEO, the CFTC alleged that the company violated trading and derivative regulations and identified the two largest cryptocurrencies, bitcoin, and ether, as commodities.

However, it is worth noting that the CFTC's stance diverges from that of another significant US government entity, the Securities and Exchange Commission (SEC). The SEC views most crypto assets (excluding Bitcoin) as securities.

Looking Into Stablecoins

Additionally, the committee will review another bill to establish a regime to oversee stablecoins.

Stablecoins are digital tokens that are often backed by traditional assets such as the US dollar, and their growing popularity has raised concerns among regulators about potential risks to financial stability.

Historic Crypto Regulations

The upcoming markups on these crypto regulatory bills are historic, as they mark the first time such legislation will be put to a vote in Congress. This represents a significant victory for crypto lobbyists who have been advocating for clear and comprehensive regulations.

Kristin Smith, the CEO of the Blockchain Association, emphasized the importance of this legislative moment, stating, "Obviously we've had some important decisions come from the courts in the past, but this is by far the most significant legislative moment that we've had."

However, it remains to be seen whether these bills will garner sufficient support from Democrats, a crucial factor in their potential to become law.

The Democratic-led Senate may pose additional obstacles, as the head of the Senate Banking Committee, Sherrod Brown, has expressed uncertainty about the necessity of further crypto regulation.

Crypto Market Structure Bill

Representative Patrick McHenry, the Republican chair of the committee, has his priorities set on advancing a crypto market structure bill. This bill aims to enhance the Commodity Futures Trading Commission's (CFTC) oversight of the crypto industry while clarifying the Securities and Exchange Commission (SEC) jurisdiction.

McHenry emphasized the urgency for the United States to catch up with other jurisdictions, such as the UK, the European Union, Singapore, and Australia, which have already established clear regulatory frameworks for digital assets.

The proposed bills have drawn substantial attention and support from the crypto industry. With bipartisan backing, there is hope that the market structure bill could succeed in the Senate.

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