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Rep. Patrick McHenry, R-North Carolina and ranking member of the House Financial Services Committee, speaks during a hearing in Washington, DC.
Andrew Harrier | bloomberg | Getty Images
Republican lawmakers passed a bill on Friday that would provide a clearer regulatory plan for crypto assets and exchanges, allowing digital assets to be traded on more traditional trading platforms and introducing a division of power between the two largest financial regulators in the United States.
The debate draft was co-written by Representatives Patrick McHenry, RN.C, and Glenn Thompson, R-Pa. , and would give the CFTC explicit spot market authority over crypto-commodities under existing law.
The Securities and Exchange Commission will regulate digital asset securities.
The bill would prohibit the SEC from blocking an alternative trading system, or ATS, from listing cryptocurrency securities and would require the SEC to “modify its rules to allow brokers and dealers to hold digital assets,” according to the bill. Draft summary.
The bill proposes a clearer path for the registered offering and sale of digital assets. The Securities and Exchange Commission (SEC) has taken several enforcement actions against US crypto entities — including Gemini, Genesis, and Kraken — by discussing companies participating in the unregistered offering and sale of securities.
The main deduction would allow DeFi assets – or decentralized finance – to exempt SEC-approved assets from registering as securities.
Cryptocurrency exchanges have called for regulatory clarity in the wake of expansive enforcement actions that have left companies and developers scrambling to move operations outside of US cryptocurrency exchanges. Coinbase And Gemini and Gemini announced offshore exchanges.
Coinbase is also involved in a court battle with the SEC over the same issues that apparently prompted the McHenry-Thompson Act. The cryptocurrency exchange received a Wells Notice, warning of impending enforcement action, from the SEC earlier this year.
The bill is likely to be rewritten and amended in the coming weeks and months, but it represents a solid vote of support from two influential Republicans.
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