House again tackles regulation of cryptocurrencies
Key leaders in the House of Representatives have taken a fresh stab at writing a comprehensive scheme to regulate cryptocurrencies in the U.S.
Why it matters: The question of which digital assets are subject to securities laws, and which aren't, has been a significant point of friction between the government and the industry since at least 2017, when entrepreneurs started raising money by issuing tokens en masse.
Driving the news: The Republican chairs of the House Financial Services and Agriculture committees, along with those of each ones' digital asset subcommittees, released a discussion draft of digital asset market structure legislation on Monday.
The 212-page bill would define which tokens or coins fall under the jurisdictions of the CFTC and the SEC, and how a digital asset can graduate out of a more restricted SEC-oversight to becoming a digital commodity.
It carves out payment stablecoins from the two categories, and deals with exchanges and trading of both kinds of assets. Case in point: Markets for secondary trading would all be subject to the Bank Secrecy Act.
Zoom in: It creates a path for issuing a digital asset, selling it and raising funds without it being defined as a security under the Securities Act of 1933.
Groups issuing new digital assets that they intend to decentralize would have a process for progressively decentralizing a system.
Teams that believe their blockchain system has matured — such that it's not under the control of any single entity — would be required to make a certification to the commission with various disclosures. The legislation then lays out a timeline where either the certification becomes effective, or the commission can engage in more consideration.
Context: Many digital assets are designed to pay a system — that no one controls — to do work for the system's users.
In most cases, digital assets don't exist to confer legal rights to holders or generate yield, as traditional financial instruments do.#USHouseMarketStructureDraft
