A law is expected to be introduced by the US legislators that will assess the cryptocurrency regulations in the US.
There are steps being taken to clarify the regulations with respect to cryptocurrency in the United States (US).
Congressmen, Stephen Lynch and Patrick McHenry presented legislation aimed at creating a committee to examine the regulations applicable to cryptocurrency in the US. The committee would comprise of industry experts and members of the Commodity Futures Trading Commission (CFTC) and US Securities Exchange Commission (SEC). The working party will be required to assess the existing regulatory and legal framework related to the digital assets in the US.
The other supporters of the bill include congressmen, Ted Budd, Glenn Thompson, and Warren Davidson.
The legislation is titled Eliminate Barriers to Innovation Act of 2021. The main purpose of the legislation will be to clarify legal issues related to the regulation of digital currency. The law is expected to elucidate the SEC and CFTC’s jurisdiction over a specific token or cryptocurrency. It is currently unclear when the token is a security and when it is a commodity. Thus, difficult to ascertain SEC and CFTC’s respective authority and control over it.
In the past, it has usually been the SEC’s enforcement actions that have provided guidance in this regard. Hester Peirce, who is the SEC Commissioner has been vocal about the issue and even tried addressing it back in 2020. She suggested a three-year grace period for crypto startups from their first sale before they could pass through the security channels. This would give the newbies room to breathe and develop their communities before having to worry about legal compliance.
Under the proposed legislation, the committee, comprising of CFTC and SEC representatives would be created within 90 days of the bill’s passage.
Non-governmental representatives in the committee would comprise of experts from various financial and investment companies, along with one academic researcher at least. Experts from financial services institutions, investor protection groups, the financial technology industry, investment organizations, and small businesses running financial technology are expected to join.
Within a time span of one year, the committee will be required to submit a report detailing its findings. The report must entail the committee’s analysis of the prevailing regulations and their effects on the markets and the US’s competitive position.
The report is also expected to examine cybersecurity laws, how fraud can be prevented in the future and how to protect investors. It would also comprise recommendations with respect to transparency, efficiency, availability, and fairness in primary and secondary digital currency markets.
Such legislation will bring the SEC and CFTC together, with both the agencies conscious of their respective jurisdictions with respect to cryptocurrency. The legislation will also streamline the process, thereby ensuring that cryptocurrency is dealt with in a smooth manner.