Legislation expected to be published in the coming weeks would review the way cryptocurrencies and digital assets are regulated and would leave important supervisory powers to the Stock and Securities Commission, according to a draft bill revised by of Barron.
Some industry leaders are already trying to change many of the draft proposals.
The bipartisan bill, written by Senator Cynthia Lummis (R.-Wyo.) And Senator Kirsten Gillibrand (D.-NY), would be the last attempt by lawmakers to develop a regulatory regime for cryptocurrencies, which has passed in the last 13 years. from a little-known cryptocurrency project to a $ 1.4 trillion market without much clarity on how tokens fit into existing legislation. A bipartisan group of lawmakers in the House of Representatives released its own bill in late April with a different regulatory approach.
A March draft of the Senate bill would leave the SEC in charge of overseeing a significant portion of the crypto industry while transferring some responsibilities to the Commodity Futures Trading Commission. The document also describes a way to create a new self-regulatory organization for the crypto industry to help the police.
The legislation would require cryptocurrency issuers to file information with the SEC if an average of more than $ 5 million worth of their tokens are traded daily and if they “engaged in business or management efforts that primarily determined the value” of the token. The tokens themselves would not be values. Disclosures could be stopped if the commercial value has fallen below the threshold or if the issuer and the main owners have not made such commercial efforts.
The 75-page document also sets out a process for banks and credit unions to issue stable currencies and creates a new type of special-purpose bank letters limited to the issuance of stable currencies that would have adapted capital requirements. Unlike traditional cryptocurrencies, the value of stablecoins is set at the value of other assets. The largest such currencies are pegged to the U.S. dollar, which issuers typically get by holding an equivalent amount of dollar-based reserves.
Most cryptocurrency trading would be within the scope of the CFTC, although in many cases issuers may still have to submit information to the SEC for a period after a currency debuts. Still, the draft legislation includes a way for token issuers to finally get out of SEC oversight, something cryptographers wanted.
The draft would also pave the way for a new self-regulatory organization (SRO), similar to the Financial Industry Regulatory Authority, or FINRA. SROs are led by industry-standardized members and carry out some enforcement actions on their own with the authority delegated by federal agencies.
Whether tokens should be treated as securities, commodities or something else has long been debated by regulators and industry. SEC President Gary Gensler said he believes most tokens are securities under the law at this time, meaning many issuers would be required to enforce measures unless the law changes or a court says their interpretation was incorrect.
Senators are actively reviewing the bill, in part in response to industry comments and the increased involvement of Senator Gillibrand. Representatives of the cryptocurrency industry have privately expressed their fears to senators about many of the bill’s provisions, including the SEC’s ongoing role in overseeing cryptocurrencies and how the bill addresses stable currencies, according to two people familiar with the matter.
Conversation points circulated among members of the Blockchain Association business group and reviewed by of Barron described the draft as proposing “an unprecedented and unfeasible tripartite regulatory regime that requires coordination between the SEC, the CFTC and a new SRO.”
“This is a work in progress, and it’s very healthy to come and go and provide feedback,” said Blockchain Association executive director Kristin Smith. of Barron.
A Lummis spokesman said senators are open to making changes to legislation, but that “there has never been any doubt that most of the regulatory structure of digital assets should fall under the jurisdiction of the SEC and the CFTC” and that it was unlikely that a bill can pass Congress without the SEC having a role. The spokesman said several industry organizations and companies have supported the direction of the legislation.
Lummis is considered one of the leading supporters of the cryptographic industry and an investor
A Gillibrand spokesman said the senator has been receiving input from industry stakeholders, consumer advocates and others to “better develop a framework that promotes innovation, accessibility and flexibility, and also prioritises consumer protection.”
Any cryptography bill is unlikely to pass Congress soon, in part because there is little consensus among lawmakers on how to regulate cryptography. The White House has also recently embarked on a comprehensive review of cryptographic policy that is not scheduled to end before the end of the summer, leaving little time to move forward with any major legislation on the issue before the November elections.
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