New Crypto Bill: CFTC & SEC Collaboration

TL; DR

The United States regulators have introduced a bill aimed at enhancing cooperation between the CFTC and the SEC.

A key focus of the US new crypto bill is to support innovation in the crypto sector.

According to the proposed US crypto bill all blockchains will register with the SEC and CFTC.

Introduction

It is clear that regulatory uncertainty and lack of clarity can stifle innovation in the tech sector as the developments in the United States show. There seems to be inconsistencies on how the SEC crypto is regulated. In the wake of an on-going cracking down on the crypto sector, the United States regulators have initiated measures to create synergy among the two major regulatory authorities, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

This guide discusses how the United States regulators are working hard to create clarity in the crypto sector by introducing legislation that supports innovation and development of the digital sector.

Financial Innovation and Technology for the 21st Century Act

The United States Senior House Republicans have introduced a crypto regulatory framework that seeks to map a way on how the crypto sector should operate in the country. In fact, the Republican members of the Agriculture and Financial Services Committees of the United States House introduced the Financial Innovation and Technology for the 21st Century Act on 20 July 2023.

Glenn Thompson, Chairman of the House Committee on Agriculture, and French Hill, Chairman of the Subcommittee on Digital Assets co-submitted the bill. This proposed crypto law comes after years and months of conflicts between the SEC and key industrial players that include exchanges, crypto projects, courts of laws and regulators on what constitutes crypto securities and commodities.

The major focus of the bill is to promote cooperation and collaboration between the two major federal regulators, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), on regulating the digital sector in the United States.

With this, the 212-page crypto regulation bill aims to close the regulatory gaps that exist within the digital industry, especially the crypto sector. This is because it will address the various risks that affect the consumers and crypto firms. Above all, its key objective is to foster innovation in the crypto sector in the United States.

The bill will amend the existing laws that govern digital assets in the country. According to the regulators, when crafting the US securities laws, the SEC should consider innovation as a critical factor.

If approved, this bill will help to clarify various aspects that govern the digital industry. For example, by using the bill it will be easy to classify digital assets as commodities or securities, thereby creating a clear boundary on who regulates the specific crypto assets, the CFTC or the SEC.

Under the current law the CFTC regulates crypto commodities and derivatives while the SEC oversees digital-asset securities. As such, the SEC has control over cryptocurrencies that it deems to be securities as well as the exchanges they are traded on. However, the SEC has no jurisdiction over pure commodities and their trading platforms.

The bill will also create clarity on how crypto exchanges and other trading platforms will operate. As a result, it will spell out how crypto exchanges and other firms will register with the US Securities and Exchanges Commission (SEC) and the Commodities Futures and Trading Commission (CFTC).

Another important thing is that this piece of crypto law will help regulators and other key stakeholders to understand how the digital sector works since it has definitions of some key terms and has clear outlines on how market participants should conduct themselves.

There will also be a need for blockchains to register with the regulatory authorities like SEC and CFTC. This process will enable the regulators to understand how each crypto project operates and the requirements it should meet. As a result, these projects will most likely comply with industry expectations and standards.

As an example, token issuers will be able to conform with the new requirements which include disclosure of roadmaps, source codes and tokenomics, among others. In the end, various crypto businesses will be subjected to regulatory scrutiny which reduces risks affecting consumers and investors. The underlying aspect is that any crypto business will register with the authorities like CFTC and SEC after meeting the regulatory requirements.

The bill also means that the SEC and CFTC will operate using a new manual which focuses on innovation and the development of the blockchain sector. Read also: SEC Allegations Spark Sell-off and Regulatory Worries in Cryptocurrency Market

CFTC and SEC Collaboration

This latest House Republicans’ proposed bill aims to increase collaboration between the CFTC and SEC to create a vibrant digital sector. To this, Representative Dusty Johnson said: “The crypto industry wants clarity and our collaborative bill gives both the CFTC and SEC a seat at the table.”

At the same time, Patrick McHenry stated “Not only can digital assets revolutionize our financial system, but their underlying blockchain technology holds promise as the building blocks for the next generation of the internet.”

Conclusion

The House Republicans’ proposed bill is designed to increase cooperation among financial regulators who include the CFTC and the SEC as well as to promote innovation in the crypto sector. It will achieve this by having clear new definitions of key terms and by providing a working manual for the SEC. This development will also increase dialogue between regulators and other stakeholders who include the investors.

FAQs About Crypto Regulation in the United States

What is the US bill on crypto regulation?

The US bill on crypto regulation is a set of proposed rules and procedures which the United States regulators make and present for consideration. Any member of the US Congress, either of the house or the senate can submit a bill. Finally, the President can approve or disapprove a bill which has been passed by the Congress.

What is the new crypto bill?

The United States has a new bill, the Financial Innovation and Technology for the 21st Century Act, submitted by the Republican members of the Agriculture and Financial Services Committees. The aim of the bill is to promote collaboration between two major federal regulators, the SEC and the CFTC.

What will regulation do to crypto?

Crypto regulation will create clarity on the roles of the regulators (SEC and CFTC) as well as establishing procedures for registration of crypto projects and reporting. The regulations will also help to protect the United States consumers, investors and crypto firms.

Is crypto SEC regulated?

There are no comprehensive pieces of regulations that govern the crypto sector in the United States. However, the regulators use existing financial legislation to govern crypto activities in the country.

Author: Mashell C., Gate.io Researcher

*This article represents only the views of the researcher and does not constitute any investment suggestions.

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