Key Points:
* Joint Effort: The draft was issued by the House Financial Services Committee and the Agriculture Committee.
* Objectives: Protect consumers, promote innovation, and strengthen U.S. leadership in digital currencies.
* Digital Goods vs. Securities: The draft seeks to clarify that the sale of digital goods in the secondary market will not automatically be classified as securities unless ownership or claims to profits/assets are granted.
* Decentralization Test: The draft provides a clear test for decentralization, requiring that no single entity has unilateral control over a digital commodity. Projects failing this test will face scrutiny and disclosure requirements for holdings exceeding 10%.
* Decentralized Finance (DeFi) Exemptions: Non-custodial decentralized finance protocols that do not have discretion over users' funds may be exempt.
* Optional Early Registration: An optional early registration pathway for issuers has been established.
* Establishing Common Rules: The draft emphasizes the need to establish common rules between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
* Accredited Investor Checks: The draft seeks to eliminate the need for accredited investor checks for investments in digital currencies.
* Comparison with FIT21: This draft is viewed as a revised version of the previous Congress's FIT21 bill, with some key differences, such as a lower threshold (1% instead of 5%) for determining the affiliated person who needs to disclose their holdings.
* Market Impact: Some believe the draft could reduce the influence of large cryptocurrency companies and encourage broader market participation.
In summary, this draft aims to provide much-needed clarity and establish a comprehensive regulatory framework for the digital asset market in the United States, balancing consumer protection with the promotion of innovation. A joint hearing on the draft is scheduled for today, May 7.
