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Whether you love or hate crypto, it's time to pay attention to what's cooking in Congress on digital assets.
The Republican leaders of the House Financial Services and Agriculture Committees on Friday released a sweeping, 162-page rethink of how the U.S. government polices digital currencies and the market that's grown up around them. You should care because the draft plan marks leading lawmakers’ most ambitious attempt yet to set up a new regulatory regime for crypto. It's got a long road ahead — House Democrats have yet to put their stamp on it, much less the Senate — but this is now the main event in Washington when it comes to digital asset policy. A primer The bill would redefine the reach of the SEC and the CFTC in the most significant way since the 2010 Dodd-Frank law. The CFTC would be the big winner, taking on exclusive jurisdiction over a new category of so-called digital commodities and related trading platforms. The SEC — which has intervened more and more into crypto in recent years — would still have a role but within some new guardrails. It's a huge shift for the CFTC, which has historically regulated derivatives like futures contracts but has not had direct oversight of the commodities underlying those instruments. The heart of the regulatory reset is how the bill parses out what would be regulated by the CFTC as a digital commodity rather than by the SEC as a security. One road to the CFTC would be whether the token operates on a decentralized network. The SEC would have the opportunity to challenge such a certification but within a limited time window and subject to court appeals. For a deeper dive into the details, read Justin Slaughter's 212-piece Twitter thread on what's in the bill, what’s missing and where he believes the political fault lines lie. Justin is policy director at crypto fund Paradigm and spent years in government working for Democrats at the SEC, CFTC and Capitol Hill. The real fight is about crypto legitimacy Democrats and consumer watchdogs will find plenty to balk at in the details of the bill — it no doubt embraces "innovation" as an important guiding principle. But Republicans would still impose regulatory red tape on crypto firms, even those issuing digital assets under a new securities exemption, for instance. The bill also rests on a series of rulemakings that, as we've learned from Dodd-Frank, could take years to wrap up and take shape based on presidential politics, industry lobbying and litigation. Skeptical leadership at the SEC and CFTC could still set up hurdles for the industry. The fundamental clash around the proposal will be whether Congress should give crypto its own custom legal pathway in the first place. The space has been rife with financial mismanagement and fraud, not to mention dubious claims about the practical value of crypto instruments beyond financial speculation. Why does it deserve special treatment? The crypto world is sending positive vibes, for now. “A comprehensive bill of this magnitude warrants an in-depth review, which we’ll be conducting over the coming days,” Coinbase chief legal officer Paul Grewal, who will testify at House Ag Tuesday and whose company is challenging the SEC’s authority, said on Twitter. “But what we’re seeing so far is encouraging.” It's Monday — What do you think of the new crypto bill? We’d love to include your voice in MM: Zach Warmbrodt, Sam Sutton.
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