Representative Patrick McHenry, Republican of North Carolina and senior member of the House Financial Services Committee, speaks during a hearing in Washington, DC
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Republican lawmakers announced a draft bill on Friday that would give crypto assets and exchanges a clearer regulatory scheme that would allow digital asset trading across platforms a more conventional trading platform and offers a division of authority between the two leading US financial regulators.
The discussion draft was co-authored by Representatives Patrick McHenry, RN.C., and Glenn Thompson, R-Pa., and would grant the Commodity Futures Trading Commission explicit spot market powers over crypto-commodities under applicable law.
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The Securities and Exchange Commission will regulate digital asset securities.
The bill would “ban the SEC” from preventing an alternative trading system, or ATS, from listing crypto securities and would require the SEC to “amend its rules to allow custodial broker-dealers to digital assets”, according to a draft summary.
The bill proposes a clearer roadmap for the offering and sale of registered digital assets. The SEC has relied on a number of enforcement actions against US crypto entities – including Gemini, Creation And Kraken – by arguing that companies participate in the offering and sale of unregistered securities.
A major push for DeFi assets — or decentralized finance — will allow SEC-certified assets to be exempt from registration as securities.
Cryptocurrency exchanges have called for regulatory clarity after extensive enforcement actions left companies and developers scrambling to move operations outside of US crypto exchanges. Coinbase and Gemini have both announced offshore exchanges.
Coinbase is also engaged in a bitter courtroom battle with the SEC over the very issues that appear to have prompted the McHenry-Thompson bill. Cryptocurrency Exchange received notice from Wellsa warning of impending enforcement action, from the SEC earlier this year.
The bill is likely to be reshaped and revised in the coming weeks and months, but it represents a strong vote of support from two influential members of the Republican Party.
