US House panel’s consideration of the crypto regulatory framework bill marks a significant stride towards providing clear guidelines for crypto market players.
On July 26, the US House panel approved legislation proposed by crypto advocates to establish clear regulatory rules for the country’s crypto market. The Republican-led bill received a 35-15 vote in favor, with support from some Democrats as well.
Chairman Patrick McHenry of North Carolina lauded the legislation and the potential of cryptocurrencies, calling it a software and financial revolution if executed properly. The Republicans emphasized the urgency of a clear regulatory bill, warning that without one, crypto companies could move abroad. Following the XRP ruling, the Republicans introduced this significant crypto bill last week, incorporating a few modifications.
Crypto supporters see the initial step as a win because they believe current regulations are unclear and hindering the U.S. Securities and Exchange Commission from taking action against the industry, particularly after the failures of major companies like FTX.
The House Agriculture Committee, led by Republican Glenn Thompson of Pennsylvania, will review its section of the bill on Thursday. This includes allocating an extra $120 million to the Commodity Futures Trading Commission, granting them new authority to regulate the asset class as stated in the legislation.
Regulatory Framework for Cryptocurrencies:
The proposed law seeks to establish guidelines for crypto companies to register with either the SEC or the CFTC. It introduces a process for digital asset creators to demonstrate the decentralization of their blockchain networks to the SEC, enabling the CFTC to oversee associated tokens as commodities. Additionally, the bill mandates collaboration between the two agencies in creating regulations and conducting studies on topics like nonfungible tokens and decentralized finance (DeFi).
The bill clarifies that a digital asset should not be presumed a security solely because it is sold as part of an investment contract. This is consistent with a recent court ruling in the SEC’s case against Ripple Labs Inc. Republicans aim to leverage this ruling to strengthen their push for new laws and demonstrate to their Democratic counterparts the necessity of such legislation.
Nevertheless, the legislation has encountered resistance, including opposition from SEC Chair Gary Gensler. He contends that the current rules are sufficient for determining if a token qualifies as a security or not, making new regulations unnecessary according to him. Additionally, some other prominent Democrats have also criticized the bill.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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