US House Republicans pass bill to regulate industry framework, SEC, CFTC registration for BTC and Stablecoins

US House Republicans, constituting lawmakers, have introduced a new bill intended to provide more regulatory clarity in the crypto sphere. The move comes after months and years of back and forth among industry players, comprising exchanges, crypto projects, regulators, and courts, in the struggle to distinguish between securities and commodities.

Also Read: UK Parliamentary Committee recommends soft-touch gambling approach – Treasury Secretary rejects it.

US House Republicans bring much-needed regulatory clarity to the industry

US Republicans have introduced a bill to establish a regulatory framework to guide the crypto industry. Christened Financial Innovation and Technology for the 21st Century Act, the 212-page document is a landmark development to help bring calm and direction to an overly chaotic discipline.

Setting clear paths for Bitcoin and crypto trading exchanges to register with the US Securities and Exchanges Commission (SEC) and the Commodities Futures and Trading Commission (CFTC), the legislation is an expected game changer in the market.

Citing House Committee on Agriculture Glenn Thompson (R-PA):

Congress must legislate to fill the regulatory gaps between the SEC and CFTC. The securities laws and regulations do not account for many of the unique characteristics of digital assets.

The aspects contained in the document span from establishing new definitions, covering digital asset exemptions, and outlining clear paths for crypto third parties like exchanges.

For starters, the legislation calls for the registration of blockchains as decentralized, meaning financial regulators would be allowed to call into question decisions made by token issuers to ensure compliance with industry standards and expectations. In this regard, token issuers must conform to new requirements, including full disclosure of tokenomics, source codes, and project road map, among other important elements for consumer protection against industry-specific risks.

Regarding crypto firms, anyone looking to register a broker-dealer or related trading system with the commission intending to operate as an exchange must first submit itself to regulatory scrutiny. Only after the SEC is satisfied with the examination can they launch.

Potential Changes to the SEC’s laws

The new bill, therefore, means the US SEC will operate using a new manual altogether, where the concept of innovation is critical in establishing rules. Specifically, any rule-making will consider innovation, with Bitcoin and remittance stablecoins passing as commodities from the word go. As such, the agency would oversee how payment stablecoins are used, provided the exchange performing the transfer is registered with the regulatory body.

However, It is worth mentioning that while the commission enjoys robust control and oversight, the bill does not mandate them to influence how the payment stablecoin is designed, structured, and operated.

If passed, the bill will increase investor protection. For this to happen, however, it is still subject to Congressional voting, where Democrats must issue support. If they stonewall it, the rules of operation will remain as is currently, subjecting the industry to the state of confusion it continues to run on.

Notwithstanding, experts have identified this news as a pivotal moment for the industry with the potential to solidify the legal status of crypto assets.

If it passes into law, it will mark the beginning of a redefined finance system in the making. Overall, the introduction of such a bill points to a more direct and active engagement between policymakers and the crypto industry in a joint effort to create a more structured environment convenient for users. 

Coinbase Chief Legal Officer Paul Grewal has weighed in on the matter, calling for speedy approval by Congress as it would finally put the US into the global conversation on digital asset regulation.