The US Senate Banking Committee, chaired by Senator Tim Scott, has released rules for the Senate's version of the Clarity Act to regulate crypto.
The US Senate is moving to develop its own version of the Clarity Act after passing the stablecoin bill last week.
As part of plans for this market structure bill, the Senate Banking Committee, through the Digital Assets Subcommittee, released rules for the bill ahead of today's hearing.
The US Senate has released the rules for the Clarity Act.
In a press release, Senate Banking Committee Chairman Tim Scott and the Digital Assets Subcommittee released a set of principles for comprehensive market structure legislation.
The senators noted that these principles will guide discussions and negotiations with stakeholders on the text of the bill.
The Senate plans to unveil its draft legislation on the crypto market structure bill by June 24. The move is part of the legislative process, with a subcommittee hearing the bill today.
Market structure principles dictate that legislation should clearly define the legality of digital assets, to provide regulatory clarity for the crypto industry.
As part of providing clarity, senators hope to include in the law “a distinction between digital asset securities and digital asset commodities.”
Second, the principles state that there should be a clear division of jurisdiction among regulators.
Essentially, the CLARITY Act aims to allocate regulatory responsibilities to several regulators, including the SEC and the CFTC, rather than having a “catch-all” regulator.
Furthermore, it proposes that regulations be modernized to account for the unique nature of digital assets and distributed ledger technology. As part of this, senators intend to include a new SEC exemption for specific digital asset fundraising in the legislation.
The SEC would also provide for a review of its onerous registration requirements for digital asset issuers and provide a clear framework for those issuers to comply.
At the June 10 SEC Crypto Roundtable, SEC Chair Paul Atkins revealed that he is already working on a regulatory framework for on-chain financial markets.
Protection for Crypto Investors
The Clarity Act principles also provide that legislation should provide protection to those who buy or trade digital assets.
This includes subjecting centralized digital asset intermediaries to “modern-day friendly registration and risk management requirements.”
The legislation would also ensure that consumer funds are protected during bankruptcy.
The rules also direct senators to include measures aimed at preventing money laundering and theft of sanctions with digital assets.
The market structure bill would also include provisions that regulators welcome to innovate in the crypto industry.
This provision would require federal financial regulators to provide clear guidance that banks and other financial institutions are permitted to conduct many crypto-related activities.
The Federal Reserve seems to have taken the first step towards this as the US central bank removed the 'reputational risk' factor, which Crypto banking was punished.