The House Financial Services Committee passed a bipartisan cryptocurrency bill on Wednesday to codify federal oversight of the digital asset industry.
The new bill focuses on establishing a crypto market structure in the U.S. It will enhance the oversight of the crypto industry by the Commodity Futures Trading Commission (CFTC). It also clarifies the jurisdiction of the Securities and Exchange Commission (SEC) concerning cryptocurrencies. With this bill, crypto advocates would not have to worry about the SEC’s perceived overreach.
“As other jurisdictions like the U.K., the [European Union], Singapore and Australia have moved forward with clear regulatory frameworks for digital assets, the United States is at risk of falling behind. We intend to change that today,” said House Financial Services Committee Chairman Rep. Patrick McHenry.
Democrats had raised concerns regarding the bill before Wednesday. Head of the Senate Banking Committee Chairman Dem. Sherrod Brown once expressed his doubt about the necessity of additional crypto regulation.
Dem. Maxine Waters also previously expressed her reservations about CFTC. She argued that passing the bill would create more confusion rather than clarity. Waters was also concerned that the bill might offer consumers and investors fewer protections.
“This bill heeds the calls from the crypto industry while disregarding the views of the administration, the Securities and Exchange Commission and consumer and investor advocates,” said Waters.
Blockchain Association CEO Kristin Smith noted this year’s Congress would be of the utmost significance for the crypto industry.
“Obviously, we’ve had some important decisions come from the courts in the past, but this is by far the most significant legislative moment that we’ve had,” said Smith.
Among numerous crypto bills proposed by lawmakers, there are two more bills that Congress will focus on. One bill aims to clearly define whether a cryptocurrency should be classified as a security or a commodity.
Another bill centers around stablecoins — digital tokens typically pegged to the value of traditional assets like the U.S. dollar. In the U.S., stablecoins have become increasingly popular among investors due to the volatility of other coins.
In addition, the House Financial Services Committee is reviewing bills related to the definition of cryptocurrencies and the oversight of stablecoins.
The cryptocurrency industry has been facing regulatory attention, particularly after investors suffered significant losses last year due to the sudden collapses of crypto companies like Celsius Network, Voyager Digital and FTX.
Over the years, crypto companies in the U.S. have operated in a regulatory gray area without clear guidelines. The SEC has repeatedly maintained that many cryptocurrencies should be treated as securities subject to investor protection rules. However, crypto proponents argue that the SEC uses the “outdated” Howey test to determine that certain tokens fall under the securities category.
The SEC’s regulatory efforts intensified recently when the agency filed lawsuits against two prominent crypto exchanges, Coinbase and Binance. In June, the SEC accused Binance and its U.S. branch of mishandling customers’ money and concealing the truth from regulators.
The same month, the SEC accused Coinbase of running its cryptocurrency trading platform without proper registration as a national securities exchange, broker and clearing agency. However, both exchanges denied these accusations later on.
Crypto companies have been actively lobbying Congress to pass legislation clarifying crypto’s status as commodities to operate under a different regulatory framework.
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