When it comes to cryptocurrency in Americathe legislature is under pressure, in part because the pressure is already suffocating digital asset companies — deserved or not.
Following recent Securities and Exchange Commission (SEC) lawsuits against Coinbase and Binance, the crypto sector is facing more uncertainty and challenges than ever when it comes to regulation and compliance with existing US laws.
A congressional hearing Tuesday (June 13) titled “The future of digital assets: bringing clarity to the digital asset ecosystemwill be closely watched by industry observers looking for clues about the future of the crypto industry, as well as some insight into what a comprehensive regulatory framework might look like.
“Emerging laws in the European Union, Japan and Hong Kong set new rules for US-issued dollar-denominated stablecoins,” wrote Jeremy Allaire, co-founder, chairman and CEO of stablecoin issuer Circle and a witness for the hearing. his prepared testimony. “That’s a point worth repeating: other countries are making laws to regulate the use of the US dollar. It is time for the United States to take the lead in developing global rules that will govern how our own currency moves around the world.”
On Tuesday afternoon, two legal texts will be discussed,a bill to provide for the regulation of stablecoins for payments, and for other purposes“and the newly introduced”Design of the discussion on the structure of the digital asset market.”
While the hearing marks the third time the current session of Congress meets to discuss stablecoin legislation, the design of the Digital Asset Market Structure is something new.
The discussion draft outlines a functional framework that would provide regulatory certainty to digital asset firms and close the gap that exists between the Commodity Futures Trading Commission (CFTC) authorities and the SEC.
It would give the CFTC jurisdiction over digital commodities and seeks to clarify the SEC’s jurisdiction over digital assets offered as part of an investment contract, while establishing a process to allow trading of digital commodities on the secondary market if they are were initially offered as part of an investment contract.
Modernization of the US payment system
In what some observers see as political theater, House Majority Whip Tom Emmer of Minnesota participated in Ohio Rep.’s induction Monday (June 12). Warren Davidson’s “SEC Stabilization Act“, a bill intended to take “corrective action” and restructure the SEC, starting with the removal of its chairman, Gary Gensler, after his “long string of abuses,” according to a press release.
Legislators’ frustrations stem from the fact that both the SEC and CFTC have attempted to resolve the legal question of whether a digital asset is a security or a commodity through enforcement action. However, it is not about more or less regulation or even new regulation, but about the application of the existing regulatory frameworks to digital assets.
“With the right regulatory framework, stablecoins and blockchain networks can scale to support billions of users and tens of trillions of dollars in payment activity,” Circle’s Allaire wrote in his prepared testimony.
He stressed that currency competition is “increasingly driven by technological competition”, and that US technological superiority should be at the core of “dollar competitiveness”. [stablecoin] bill to President Joe Biden’s desk “a national priority”.
That’s because both the US and the rest of the world are increasingly moving towards a more digitally native operating environment, where businesses and consumers alike will ultimately rely primarily on digital native vehicles for money transfer and the programmability of value.
“The European Union, Canada, Dubai and Hong Kong are examples of jurisdictions that have implemented new digital asset laws or regulations in recent months, creating attractive destinations for entities increasingly unwelcome by regulators here in the US.” Coy Garrison, a partner at Steptoe and Johnson and another witness at the hearing, said in prepared testimony.
Multiple, composite forward-looking technologies are driving this rate of change and include 5G/6G networks, quantum computing, blockchains and distributed ledger technology (DLT), as well as artificial intelligence (AI).
Still, not everyone speaking at the House Financial Services Committee hearing is convinced that existing rulebooks need to be rewritten or that innovation is incompatible with regulation.
“New legislation is not in the best interest of the investing public or the blockchain industry,” said Aaron Kaplan, founder and co-CEO of Prometheum, an SEC- and FINRA-registered, full-service digital asset securities marketplace, in prepared testimony. “It will take years to implement the legislative efforts, while the American public will continue to operate on reckless, illegitimate platforms.”
“Those advocating for new laws are simply unwilling to comply with existing applicable securities laws and regulations,” Kaplan added.
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