US crypto future hinges on 4 digital asset bills.

US crypto future hinges on 4 digital asset bills.

The Growing Impact of Congressional Bills on the Blockchain Industry

Over the past few years, the blockchain industry has witnessed an increasing number of bills introduced to Congress, with a staggering 50 bills reported since 2022. These bills aim to regulate various aspects of the industry, including stablecoins and the jurisdiction of US regulators. While many of these bills are still under discussion, there are four notable ones that could have a significant impact on the industry if passed.

Financial Innovation and Technology for the 21st Century Act

Introduced by Republican members of the Agriculture and Financial Services Committees of the United States House, the Financial Innovation and Technology for the 21st Century Act aims to create a solid process for determining if a digital asset is a commodity or security. This bill brings much-needed clarity to the regulatory landscape by defining the jurisdictions of regulators, mainly the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

One of the critical provisions of this bill is the opportunity for crypto assets labeled as securities to be re-labeled as commodities. This opens up possibilities for projects that were previously shut down due to legal decisions, offering them a path for revival.

Responsible Financial Innovation Act (RFIA)

The RFIA, also known as the Lummis-Gillibrand bill, shares similar goals with the Financial Innovation and Technology for the 21st Century Act. This bill aims to clarify the roles of the SEC and CFTC in regulating the crypto industry and focuses on consumer protection. It seeks to prevent events like the FTX controversy by providing laws that safeguard consumers.

The RFIA covers various aspects, including explicit tax treatment for digital assets, equitable processing of bank applications for crypto firms, recognition of decentralized autonomous organizations (DAOs) in the tax code, and the establishment of an advisory committee. Additionally, depository institutions would be exclusively authorized to issue stablecoins, ensuring stability in the market.

Digital Asset Market Structure Bill (DAMS)

The Digital Asset Market Structure Bill, introduced on June 1, aims to define the roles of the SEC and CFTC in determining if certain cryptocurrencies are securities or commodities. Representative Maxine Waters has also expressed interest in this bill, seeking input from Treasury Secretary Janet Yellen and SEC Chair Gary Gensler.

Under the DAMS bill, cryptocurrencies must undergo certification with the SEC to prove their decentralization before being considered commodities. The bill also enables crypto exchanges to register as alternative trading systems (ATS) with the SEC, while broker-dealers would be allowed to custody cryptocurrencies if they meet regulatory requirements. This bill brings clarity to ATS rules and paves the way for the trading of digital commodities and stablecoins on ATS platforms.

Digital Commodity Exchange Act (DCEA)

The Digital Commodity Exchange Act, first introduced in September 2020, grants the CFTC the power to register and regulate spot exchanges, subjecting them to the same rules as other commodity exchanges. This bill differentiates between digital commodities and crypto securities, with the CFTC overseeing the former and the SEC supervising the latter.

Project developers in the crypto industry can voluntarily register with the CFTC, meeting the necessary disclosure requirements to publicly trade and list their assets on exchanges. The DCEA also allows stablecoin providers to register as “fixed-value digital commodity operators,” subject to specific recording and reporting obligations.

Other Bills

While these four bills have gained significant attention, several other bills concerning the blockchain industry are making their way through Congress. Proposals such as the Stablecoin TRUST Act and the Stablecoin Innovation and Protection Act aim to regulate stablecoins. Additionally, bills like the Crypto Consumer Investor Protection Act, the Crypto Exchange Disclosure Act, and the Digital Asset Anti-Money Laundering Act have been introduced but have seen limited progress.

In conclusion, the blockchain industry is witnessing a surge in regulatory bills that seek to define the roles of regulators and provide clarity to market participants. The Financial Innovation and Technology for the 21st Century Act, the Responsible Financial Innovation Act, the Digital Asset Market Structure Bill, and the Digital Commodity Exchange Act are four bills with the potential to shape the future of the industry. Stakeholders in the blockchain space eagerly await the outcome of these bills, as they could foster innovation, protect consumers, and position the United States as a leader in finance and technology.