US Congressman presents proposal to potentially legitimize digital assets

US Congressman Paul Gosar (R-AZ) has introduced a proposal, which aims to bring clarity and legitimacy to digital assets such as Bitcoin. The Crypto-Currency Act of 2020 addresses several regulatory issues faced by crypto. At present, the US has no unified framework for crypto to aid related businesses, investors or entrepreneurs.

The lack of clarity has resulted in confusion over what cryptocurrencies are, how they differ from each other and which regulator must oversee different assets. Gosar’s bill, an updated version of a proposal that leaked in December, attempts to address these questions. 

As per the new draft, regulators must classify digital assets into three categories: crypto-commodity, crypto-currency and crypto-security. The regulators overseeing these three categories, namely - the Commodity Futures Trading Commission (CFTC), the Secretary of the Treasury and the Securities and Exchange Commission (SEC) - will be in charge of these assets. 

The bill defines “crypto-currency” as a “representation of a US currency,” such as a stablecoin, as opposed to Bitcoin, which is not backed by any government and does not represent any national currency. Under the proposal, Tether (USDT), USD Coin (USDC), TrueUSD (TUSD) and similar digital assets pegged to the US dollar would be governed by the US Treasury through the Financial Crimes Enforcement Network (FinCEN).

“Crypto-commodities” are classified as economic goods and services that are on a blockchain or decentralized cryptographic ledger. This seemingly applies to assets like Bitcoin. “Crypto-securities” are defined as “all debt, equity, and derivative instruments that rest on a blockchain or decentralized cryptographic ledger.”