• US House Financial Services Chair Patrick McHenry plans to vote on a bill that regulates digital assets by mid-July.
• The draft legislation would classify cryptocurrencies as a security or commodity and regulate exchanges.
• Democrats have voiced concern, citing potential for bad actors to be rewarded with a “get out of jail free card” if the bill passes.
Draft Legislation to Regulate Digital Assets
US House Financial Services Committee Chair Patrick T. McHenry announced plans to hold a vote on a bill that would regulate digital assets by mid-July. The draft legislation in question, the Digital Asset Market Structure Discussion Draft, would classify cryptocurrencies as either a security or commodity and regulate exchanges accordingly. This would create a framework that gives jurisdiction over digital commodities to the Commodity Futures Trading Commission (CFTC) and clarifies the Securities and Exchange Commission’s (SEC) jurisdiction over “digital assets offered as part of an investment contract.”
McHenry Plans Bipartisan Process
McHenry said he wants a bipartisan process during Tuesday’s committee hearing on the matter. He outlined his goal is for there to be “plenty of time for us members to find common ground on how we legislate here,” but added that he intends for this committee to “markup some form of this legislation when we return from the July 4 recess.” The House returns from recess on July 11th.
Democrats Voice Concerns
Former chair of the House Financial Services Committee Maxine Waters, D-Calif., expressed her concerns about the bill stating it “appears to halt any enforcement actions by the SEC against crypto firms, even when they have committed fraud.” She further elaborated her point saying this provisional registration could reward bad actors with a “get out of jail free card” allowing them to continue harming consumers and investors.
SEC Lawsuit Against Crypto Exchanges
The recent hearing comes one week after news broke about SEC suing cryptocurrency exchanges Coinbase and Binance accusing them of operating their platform without being registered as an exchange broker or clearing agency; misleading investors; unlawfully operating as an exchange; among other charges against Binance and its CEO Changpeng Zhao specifically. In response, SEC Chairman Gary Gensler argued last week that it is possible for exchanges to register with the agency despite platforms’ assertions otherwise.
The proposed bill discussed in Tuesday’s hearing seeks to provide clarity on regulations surrounding digital assets while also protecting consumer interests from potentially unscrupulous actors within cryptospace–however opinions remain divided regarding its final implications should it pass next month during scheduled voting period beginning July 11th after House returns from recess