Republican Lawmakers Propose Draft Bill for Clearer Regulation of Crypto Assets and Exchanges

Republican lawmakers have recently released a draft bill aimed at providing a clearer regulatory plan for crypto assets and exchanges. The bill would allow digital assets to be traded on more conventional trading platforms and introduce a division of authority between the top two U.S. financial regulators.

New Regulatory Plan for Crypto Commodities

The discussion draft, co-authored by Reps. Patrick McHenry and Glenn Thompson, would grant the Commodity Futures Trading Commission explicit spot market authority over crypto commodities under existing law. The Securities and Exchange Commission would regulate digital-asset securities. The bill would also prohibit the SEC from preventing an alternative trading system from listing crypto securities and require the SEC to modify its rules to allow broker-dealers to custody digital assets.

A Clearer Pathway for Registered Offer and Sale of Digital Assets

The bill proposes a clearer pathway for the registered offer and sale of digital assets. The SEC has based several enforcement actions against American crypto entities such as Gemini, Genesis, and Kraken, by arguing that these companies engaged in the unregistered offer and sale of securities. A key carve-out for DeFi assets would allow SEC-certified assets to be exempt from registering as securities.

Crypto Exchanges Call for Regulatory Clarity

Crypto exchanges have been calling for regulatory clarity in the wake of expansive enforcement actions that have left companies and developers scrambling to move operations beyond the U.S. Crypto exchanges Coinbase and Gemini have both announced off-shore exchange operations. Coinbase is also engaged in a courtroom battle with the SEC over the very issues that prompted the McHenry-Thompson bill. The crypto exchange received a Wells notice, a warning of impending enforcement action, from the SEC earlier this year.

The draft bill, although likely to be reshaped and modified in the coming weeks and months, represents a powerful vote of support from two influential Republican members. The introduction of a clearer regulatory plan for crypto assets and exchanges is a positive step towards providing much-needed certainty for the industry. If passed, the bill would allow digital assets to be traded on more conventional trading platforms and provide a clearer pathway for the registered offer and sale of digital assets.