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- 1 The key House committees introduced a bill clarifying the roles of SEC and CFTC.
- 2 With this “role specification”, both government agencies can find their boundaries under which they can work.
A draft bill was introduced by Reps. Patrick McHenry, R-N.C., and Glenn Thompson, R-Pa. on June 2nd, Friday, providing a more precise delineation of authority between two U.S. government agencies. As CNBC has reported, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) will get clarification related to crypto issues.
Patrick McHenry has said that “this discussion draft is a critical first step toward much-needed clarity for the digital asset ecosystem.” He also added that he “encourages stakeholders and market participants to provide constructive feedback to help them to improve their legislation.”
As per the report, the bill would provide an easy solution “to registration and explicitly allow crypto securities to be traded on alternative trading systems.” This would be under the purview of the SEC, while CFTC would oversee the crypto spot commodity market under existing law.
SEC and CFTC’s Role Specification
Under the newly introduced draft by Republican lawmakers, crypto assets and exchanges would get a “clearer regulatory plan.” This also allows the digital assets to be traded on more conventional trading platforms and also brings a division of authority between the security market regulator and the derivatives market regulator.
#NEW: Chairman @PatrickMcHenry & @RepFrenchHill release a digital asset market structure proposal with @HouseAgGOP Chairman @CongressmanGT & @RepDustyJohnson in an unprecedented joint effort to provide clarity to the digital asset ecosystem.
— Financial Services GOP (@FinancialCmte) June 2, 2023
Read more:https://t.co/089dV2SYng pic.twitter.com/pSIIVjfslU
As per the draft saying, the CFTC gets spot market authority on crypto commodities under the present law. On the other hand, the SEC regulates digital-asset securities. It added that the draft would “prohibit the government agency” from preventing an Alternative Trading System, or ATS, from listing crypto securities. Meanwhile, this would require the U.S.-based security market regulator to “modify its rules to allow broker-dealers to custody digital assets.”
It can be seen that the draft bill has added a more precise way over the registration offer and sales of digital assets. Notably, the SEC is already involved in many enforcement actions against the U.S.-based crypto firms such as Gemini, Genesis and Kraken. The concern by the U.S.-based securities market regulator was about the engagement of these firms in the “unregistered offerings and sales of securities.”
Moreover, an effort towards decentralized finance (DeFi) assets added in the draft would allow SEC-certified assets “to be exempt from registering as securities.”
It must be noted that the U.S.-based crypto exchanges were demanding for regulatory clarity. In between the unclear regulatory issues, the U.S.-based crypto firms, Coinbase and Gemini, have announced their off-shore exchange operations.
Moreover, Coinbase, the crypto exchange, is still engaged in its legal battle with the U.S.-based securities market regulator on issues that prompted the McHenry-Thompson bill. However, Coinbase has received a Wells notice, that is a warning of impending enforcement action, from the Securities and Exchange Commission earlier this year.
This draft bill may be further modified in the upcoming weeks or months, but is getting a decisive vote of support from the Republican members.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
