Senior House Republicans in the U.S. Congress have presented a new legislative bill that seeks to redefine digital tokens from securities to commodities. It is an important step to address the regulatory issues surrounding digital assets.
The chairmen of the House Financial Services Commission and Agriculture Committee issued a proposal that aims to create a more defined structure and establish a set of rules for the handling of cryptocurrency across the nation.
The classification of crypto asset as a commodity or a security is one of the main issues addressed in the proposed law.
According to the “discussion draught,” certified crypto businesses that deal with tokens or digital currencies can claim that these assets are commodities. In order to demonstrate their decentralisation, businesses must verify that no single party owns more than 20% of the assets.
Apart from this, businesses must also give an in-depth description of how they work.
In order to assess whether the asset is subject to its jurisdiction, the Securities and Exchange Commission (SEC) would retain the right to contest this assertion.
The uncertainty surrounding when a project can be deemed sufficiently decentralised for its tokens to no longer be categorised as investment contracts has long been a source of friction for crypto projects working in the United States.
The proposed law aims to overcome this problem by giving a precise definition of decentralisation, giving running crypto projects in the nation more assurance.
Along with categorization initiatives, the draught law suggests the creation of new registered businesses known as a digital commodity exchange, under the control of the Commodity Futures Trading Commission (CFTC).
These exchanges would have to adhere to the agency’s standard safeguards, such as segregating client data and safeguards against manipulation of the market.
In order to further tighten control in the cryptocurrency sector, the CFTC would also be given expanded power over the direct trading of cryptocurrency commodities.
The proposed law also emphasises the Republicans’ interest in researching the non-fungible token (NFT) and decentralised finance (DeFi) industries.
This suggests that conversations about the legalisation of these particular aspects of the cryptocurrency economy may come up in the future.
Congressman Patrick McHenry, who oversaw the bill’s writing, hopes that it would act as a starting point for discussions with House Democrats and Senate colleagues while highlighting the importance of bipartisan cooperation in creating crypto legislation.
Although the draught law tackles a number of significant issues voiced by the cryptocurrency sector, it is still awaiting Democratic backing, highlighting the difficulties in reaching agreement on the legal framework for virtual assets.
It remains to be seen whether this idea would open the door for a more welcoming and adaptable ecosystem for crypto assets and digital tokens inside the United States.
