House GOP Bill Draft Outlines Crypto Oversight Framework

The United States House Republicans released a draft of a bill that would place oversight authority of the digital assets markets in the hands of the Commodity Futures Trading Commission. This proposal would split up supervision of the crypto markets between the CFTC and the Securities and Exchange Commission.

The draft provides clearer guidance on when a digital asset falls under the jurisdiction of the SEC, the CFTC, or both. Essentially, the draft would grant power and funding to the CFTC and require firms to register with the it as well. The SEC, on the other hand, would retain oversight over securities and specific hybrid assets. It will also have the authority to oversee digital commodity activities by SEC-registered broker-dealers and exchanges, even though the  firms will be required to register the activity with the CFTC as well.

In addition to allocating oversight authority to the SEC and CFTC, the draft also provides key crypto definitions such as definitions for “digital commodity,” “blockchain system,” and “stablecoins.” In fact, it explicitly excludes digital commodities and payment stablecoins from the definitions of a security.

This draft represents a longstanding effort by the Republican Party to regulate digital assets. According to many, the digital assets market is in need of regulation as it is unstable and dangerous without such.  “We made historic progress in the 118th Congress to build bipartisan, bicameral consensus in crafting a functional regulatory framework for digital assets,” House Financial Services Committee Chair French Hill said. “Our discussion draft builds upon that work and provides much-needed regulatory clarity for the digital asset ecosystem by protecting consumers and safeguarding the long-term integrity of digital asset markets in the United States.”

Congress in Disagreement as to how Crypto Should be Regulated

Although many are in support of such regulations, many are skeptical of how exactly it will be regulated and whether this bill represents the most efficient and effective way of doing so. Congresswoman Maxine Waters announced that she intends to block the draft as she is concerned with conflicts of interest that may arise from the Trump family crypto investments.

Other senators, such as Ruben Gallego said that he understands the need to regulate digital assets but yet finds issue with how the bill itself addresses such a use. “[T]he bill as it currently stands still has numerous issues that must be addressed, including adding stronger provisions on anti-money laundering, foreign issuers, national security, preserving the safety and soundness of our financial system, and accountability for those who don’t meet the act’s requirement,” a group of Democratic Senators led by Gallego said. Although they are against the bill’s current version, they are “eager to continue working with our colleagues to address these issues.”

While both the Democratic and Republican parties are in agreement that the digital asset market should be a regulated one, the parties are in some sort of disagreement as to how exactly it should be regulated. Additional hearings are scheduled to take place to hear each side’s views on the matter.