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The US House of Representatives has passed new legislation that could provide some clarity on the rules surrounding cryptocurrencies. That is, once approved by the Senate and signed by President Biden.
The Eliminate Barriers to Innovation Act, introduced by North Carolina Republican Patrick McHenry, is intended to “direct the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) to jointly establish a digital asset working group.”
In what seems to be a first serious attempt on clarifying important issues, the working group will be composed of a large selection of stakeholders. The idea is to have SEC and CFTC employees as well as FinTech companies working in the digital asset sphere, take place. In addition, there are seats reserved at the table for financial firms overseen by either agency, academic researchers and investor watchdog groups. There will also be representation from smaller FinTech firms and organizations that support underserved businesses.
In its search to find answers on some of the most prevalent matters, the working group is tasked to study the U.S. current laws and regulations regarding digital assets.
The group will study how regulations are affecting cryptocurrency markets. It will investigate how those markets could be fairer, more efficient, and more transparent. Attention will also be given to the effect that legislature has on the U.S.’ competitiveness in financial technology. The group will also be zooming in on security standards for crypto custodians and other intermediaries.
The study should lead to recommendations on how the U.S. can counter possible fraud and price manipulation in crypto markets and protect investors. The working group will also work towards clarity on how crypto firms can best comply with the Bank Secrecy Act. The latter obligates financial institutions to fight money laundering and prevent terrorism financing.
House Representative McHenry commented on the new legislature in a press release:
“This is the first step in opening up the dialogue between our regulators and market participants and [moving toward]needed clarity,”
Clarity in the crypto space is certainly a necessity as basic questions have remained unanswered. For example, it is still not clear whether digital assets are classified as securities, commodities, or something else entirely. As a result of this large grey area, Ripple Labs is currently involved in a lawsuit with the SEC over its native token XRP.
While crypto firms themselves disagree about what digital asset regulations should ultimately look like, they are bringing in expertise to safeguard their positions. Recently Binance brought in Brian Brooks as Chief Executive Officer of its U.S. affiliate. Brooks served as Comptroller of the Currency in 2020-2021.