US lawmakers propose a bill to clarify cryptocurrency regulations

The United States lawmakers proposed a bill to provide clear regulations for the country’s cryptocurrency industry

Lawmakers in the United States have introduced a bill that seeks to clarify cryptocurrency regulation in the country. The bill will create a working group tasked with evaluating cryptocurrency regulations in the country, with contributions from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Representatives Patrick McHenry and Stephen Lynch introduced the bill yesterday. If approved, the bill would create a working group of industry experts and representatives from the SEC and CFTC. The group’s job would be to evaluate the existing legal and regulatory framework around digital assets in the country. The bill was co-sponsored by Glenn Thompson, Ted Budd and Warren Davidson.

The lack of cryptocurrency regulation is a key reason why some companies and institutional investors are yet to enter the crypto market. Some crypto projects like XRP landed in trouble with the SEC because the coin was considered a security. However, the lack of a clear regulatory definition makes it challenging for some crypto and blockchain companies to know if they are breaking the rules.

As a novel industry, the legislation’s ultimate goal is to clarify when the SEC or other regulatory agency has jurisdiction over a particular token or cryptocurrency. The “Eliminate Barriers to Innovation Act of 2021” would provide clear guidelines to define what  makes cryptocurrency a security or a commodity.

After the bill is passed, the United States Congress would set up the working group within 90 days, and it would comprise SEC and CFTC representatives, and crypto industry experts. The industry experts would be from a financial technology (fintech) company, investor protection groups, a financial services institution, an academic researcher, small businesses using fintech and organisations that support investments in underserved businesses.

A year after the creation of the working group, the experts would be expected to submit a report analysing the current regulations and how they affect the primary and secondary markets. The report would also contain information on how the regulations affect the country’s competitive position.

The working group would look at how current regulations treat custody, private key management and cybersecurity, and present the best practices to prevent fraud, protect investors and similar issues.

Finally, the report would also include recommendations on improving primary and secondary crypto markets, especially how to make them fair, orderly, efficient, transparent and available to everyone.