Regulatory upgrade! The United States will enact a bill to clarify crypto regulations

According to Coindesk, the U.S. Congress may soon try to clarify its digital asset regulations. Republican House of Representatives Patrick McHenry (North Carolina) and Democratic House of Representatives Stephen Lynch (Massachusetts) introduced a bill on Tuesday, proposing the creation of a working group composed of industry experts and representatives of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to evaluate the existing legal and regulatory framework for digital assets in the United States.

The bill's three other sponsors are Republicans Glenn Thompson (Pennsylvania), Ted Budd (North Carolina) and Warren Davidson (Ohio).

The legislation, known as the “Eliminating Barriers to Innovation Act of 2021,” seeks to clarify when the SEC has jurisdiction over a cryptocurrency when it is defined as a security and when the CFTC has jurisdiction over a cryptocurrency when it is defined as a commodity.

Under the terms of the bill, Congress would establish a working group within 90 days of passage consisting of representatives from the SEC and CFTC. Non-governmental representatives would come from financial technology companies, financial services institutions, small businesses that use financial technology, investor protection groups, organizations that support investment in underserved businesses, and at least one academic researcher.

The bill requires that within one year, the panel submit a report analyzing current regulations, their impact on primary and secondary markets, and how the existing system has affected the competitive position of the United States. The report will also examine how regulatory, private key management, and cybersecurity issues are currently handled legally, and what the best strategies are for future fraud prevention, investor protection, and other related issues. The report is also required to include recommendations for improving primary and secondary digital asset markets, including "fairness, orderliness, integrity, efficiency, transparency, usability, and efficacy."

Amy Davine Kim, chief policy officer at the Chamber of Digital Commerce, said the legislation aims to establish an organized, comprehensive regulatory framework for digital assets in the United States.

“It will bring the SEC and CFTC together in a formal, compliant way to address some of the key issues that have plagued legal clarity in this space for many years,” Kim said. “Now we have an opportunity to start working through these issues methodically with some of the stakeholders.”

Rep. Don Beyer (D-Va.) said the bill was originally scheduled to be introduced Monday for a voice vote by the full House because of its broad bipartisan support, but that was delayed because the Freedom Caucus forced a delay in votes on non-controversial legislation.

It is reported that the laws and regulations in the United States are not perfect in the field of encryption. There are no clear regulations on under what circumstances a certain cryptocurrency can be considered safe, and some past enforcement actions of the SEC have provided a lot of guidance for this. SEC Commissioner Hester Peirce tried to solve the problem in 2020. She proposed to provide a three-year safe harbor period for encryption projects. That is, encryption startups will have a three-year grace period from the initial token issuance to achieve a sufficient level of decentralization to pass the institutional securities test of the US Supreme Court. (Bitpush)