A new bipartisan effort, led by lawmakers Tom Emmer and Darren Soto, aims to address legal disputes between the SEC and crypto organizations by reintroducing the Securities Clarity Act.
The Securities Clarity Act, first introduced in 2020, seeks to establish clear distinctions between commodities and securities, improving regulatory laws related to digital assets.
Emmer believes that the existing law’s failure to differentiate between an asset and the securities contract it may be associated with hampers innovation in the United States.
If the new legislation is passed, it will consider an “asset sold as part of an investment contract, whether physical or digital,” as not being classified as a security after it is sold or transferred.
Today, I introduced the Securities Clarity Act with @RepDarrenSoto. This bill clarifies the regulatory classification of digital assets and provides market certainty for innovators and clear jurisdictional boundaries for regulators. pic.twitter.com/xgsLAm2Yhh
— Tom Emmer (@GOPMajorityWhip) May 18, 2023
This will distinguish the “investment contract asset” from the securities offering it was originally associated with, making the definition “technology neutral.”
The act has been introduced in response to a legal dispute between Coinbase, a well-known cryptocurrency exchange, and the SEC.
At the beginning of this year, the SEC sent Coinbase a Wells notice, which is a warning of possible future actions. In response, Coinbase has taken legal action to request clearer regulations from the SEC.
As the court case continues, the SEC has now responded to Coinbase’s arguments.
During this week, the SEC responded to Coinbase’s request for substantial regulatory changes and recognized the importance of careful consideration. They also mentioned the possibility of starting a formal process to establish new rules on the subject.
By acknowledging this, the SEC shows that they understand the potential influence that crypto assets can have on both the cryptocurrency market and the wider securities market.
In the legal battle between the SEC and Ripple, the court has instructed the SEC to make public the “Hinman docs.” These documents consist of drafts and emails related to a speech given by William Hinman more than four years ago. The content of these documents could potentially favor Ripple in the case.
During his speech, Hinman stated that the SEC did not consider Ethereum (ETH) to be a security back then. Ripple intends to use this information to gain insights into why the SEC currently classifies XRP, their own cryptocurrency, as a security.
The bipartisan Securities Clarity Act is introduced at a crucial time to bring clarity to the ever-changing world of digital assets and how they relate to securities regulations.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.