In a significant move, Republican members of the Agriculture and Financial Services Committees in the United States House have jointly introduced a 212-page bill called the “Financial Innovation and Technology for the 21st Century Act.” This comprehensive legislation, unveiled on July 20, aims to create a robust regulatory framework for digital assets and address specific risks associated with various digital asset-related activities.
Under the proposed bill, the Commodity Futures Trading Commission (CFTC) will be granted jurisdiction over digital commodities, while the Securities and Exchange Commission (SEC) will have its jurisdiction clarified. Additionally, a structured process will be established for digital assets initially considered securities to be sold as commodities.
To be considered a commodity, digital assets must meet certain conditions, with decentralization being a key requirement. These digital asset commodities will be eligible for sale on SEC-registered digital asset trading systems. To enhance transparency and accountability, market participants will face new and comprehensive disclosure requirements, potentially necessitating registration with both the CFTC and the SEC.
Furthermore, the bill emphasizes collaboration between US regulators and their international counterparts to create consistent regulatory standards. To gain a deeper understanding of non-fungible tokens (NFTs) and their impact on traditional marketplaces, the Government Accountability Office will conduct a study as required by the legislation.
Prior to the bill’s introduction, Representatives French Hill and Dusty Johnson, both cosponsors of the bill, sent a letter to SEC Chair Gary Gensler, expressing concerns about the agency’s approach to regulating the crypto industry through “regulation by enforcement.”
The bill’s introductory materials highlight the need for a regulatory regime designed explicitly for digital assets, as the current SEC framework lacks the necessary clarity for these entities to operate effectively.
The Financial Innovation and Technology for the 21st Century Act boasts additional cosponsors, including Glenn Thompson, Tom Emmer, and Warren Davidson. The two House committees collaborated extensively on this bill, holding several joint meetings throughout the year to fine-tune its provisions.
This bill’s introduction comes amidst increasing interest in regulating the cryptocurrency market, and it will compete with the bipartisan Responsible Financial Innovation Act recently introduced by Senators Cynthia Lummis and Kirsten Gillibrand.
As the digital asset market continues to evolve, the proposed regulatory framework aims to provide greater certainty, oversight, and protection for investors and market participants, signaling a significant step forward for the crypto industry in the United States.
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