Congress may soon try to clarify digital asset regulation in the U.S.

On Tuesday, a bill called the ‘Eliminate Barriers to Innovation Act of 2021’ was introduced in Congress to provide clarity over cryptocurrencyto and establish a regulatory framework. A group composed of industry experts and representatives from the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are to clarify when the SEC has jurisdiction over a particular token or cryptocurrency (i.e., when it is a security) and when the CFTC has jurisdiction (i.e., when it is a commodity). 

The legislation was introduced by representatives Patrick McHenry (R-N.C.) and Stephen Lynch (D-Mass.) and is co-sponsored by Glenn Thompson (R-Pa.), Ted Budd (R-N.C.) and Warren Davidson (R-Ohio).

Within 90 days of passing of the bill, a working group would be created that will have one year to present a report with analysis on current regulations, the impact that these regulations have have on primary and secondary markets and showcasing its effect on U.S.’ competitive position.

Chief Policy Officer at the Chamber of Digital Commerce, Amy Davine Kim, was pleased over the proposed legislature and said:

“It brings together both the SEC and CFTC in a formal way, to work through some of the key issues that have impacted legal clarity in the space for years. Now we have an opportunity to start addressing them in a methodical way with a number of stakeholders.”

The report is also expected to provide insights on how custody, private key management, cybersecurity and investor protection are reflected under (current) legislature and how to best prepare for the future. Recommendations on the primary and secondary digital asset markets are also to be included, focusing on their “fairness, orderliness, integrity, efficiency, transparency, availability and efficacy.”

Non-governmental representatives from multiple sectors will be forming the group. This will include representatives from a financial technology company, a financial services institution, small businesses using financial technology, investor protection groups, organizations that support investments in underserved businesses and at least one academic researcher.