Despite the fact that the US Congress is stubbornly unwilling to pass a bill on crypto and Bitcoin regulation, there are a flurry of political proposals to that effect.
After the proposal to regulate DeFi, now comes another one that would like to force crypto exchanges to register with the SEC.
The SEC’s role in crypto and Bitcoin regulation
The Securities and Exchange Commission (SEC) is the US agency that is responsible for the securities markets, and therefore also for the exchanges on which they are allowed to be traded.
However, the recent New York court ruling stated that cryptocurrencies such as XRP that are traded on secondary markets are not to be considered securities.
Since crypto exchanges are primarily secondary markets, in theory it should not be the SEC that regulates and supervises them, but the CFTC, or the Commodity Futures Trading Commission.
Indeed, the Lummis-Gillibrand bill that aims to regulate crypto markets would assign precisely to the CFTC the task of overseeing crypto exchanges.
This dichotomy also appears in the new bill introduced this time in the House instead of the Senate.
The new bill
The new bill introduced in the House yesterday was called, perhaps a bit pompously, the “Financial Innovation and Technology for the 21st Century Act.”
It was introduced by the Chairman of the Subcommittee on Digital Assets, French Hill, the Chairman of the Committee on Agriculture, Glenn “GT” Thompson, and the Chairman of the Subcommittee on Commodity Markets, Dusty Johnson, all three Republicans.
So unlike the previous two bills introduced in the Senate, both of which were bipartisan, this one instead is a policy initiative by only members of the Republican Party.
According to French Hill, this would be an initiative of the House Committees on Financial Services and Agriculture in collaboration with President Biden’s Democratic administration.
Hill also argues that this bill, had it been in place last year, would have prevented FTX from stealing billions of dollars of their customers’ funds.
It is worth mentioning that at present this is only a bill, which will only begin the process of discussion in Congress next week.
Crypto regulation and Bitcoin: comments on the new bill
According to Glenn Thompson, the drafting team received extensive feedback from stakeholders and market participants in order to get to the bottom of existing regulatory gaps.
Dusty Johnson added that the crypto industry wants clarity, and that this collaborative bill gives both the CFTC and SEC a seat at the table.
However, perhaps the most interesting comment comes from the chairman of the House Financial Services Committee, Republican Patrick McHenry, who says that the current one is a crucial time for the US wanting to maintain its position as a global leader in innovation and adoption of new technologies.
Indeed, according to McHenry, digital assets can revolutionize the financial system, and the underlying blockchain technology holds promise as a building block for the next generation of the Internet.
McHenry stated:
“As other countries move forward with digital asset regulatory frameworks and Chair Gensler continues his regulation by enforcement, the U.S. is falling behind. Innovators need regulatory clarity and certainty to enable this technology to achieve its full potential. That’s why Republicans introduced the FIT for the 21st Century Act to finally provide clear rules of the road so the digital asset ecosystem can thrive in the U.S. This legislation is the product of years of work and unprecedented coordination between the House Financial Services and Agriculture Committees.”
The likelihood of success
In theory, if such a bill had the support of both the Democratic government and the Republican-majority Congress, it might have a chance of success.
However, the problem seems to be the timing, because there will be an election next year, and given the way the Lummis-Gillibrand bill turned out it seems unlikely that the new text could be passed before the election.
In that case these could change the political scenario making it perhaps hostile to this bill.
However, should Lummis-Gillibrand be abandoned, and Congress focus only more on the FIT for the 21st Century Act, the possibility may exist that this initiative will be more successful and in less time.
The fact that debate on this will begin as early as next week would seem to suggest that there is some sort of fast track for the FIT for the 21st Century Act that could lead to its passage more quickly than usual.
However, the hypothesis that in view of next year’s elections this is yet another propaganda initiative, this time by the Republicans, is also still valid, although the eventual support of Biden’s Democratic cabinet would give it a whole other flavor.
Then again, the US is really falling behind in this respect, with a real risk of losing financial leadership globally. It is therefore more than logical to imagine that they may have finally decided to do something concrete about it.