Congressman Tom Emmer of Minnesota proposed a bill to change securities to define and include digital assets before the U.S. House of Representatives. The so-called Securities Clarity Act was introduced by Emmer, along with Reps. Darren Soto and Ro Khanna.
It seems like U.S. regulators are really stepping in on crypto regulatory clarification, especially the investment process and fundraising for blockchain-based protocols. According to the bill, crypto-related products may be deemed investment contracts, but nowadays, they are not inherently securities as defined by the Securities Act. The current situation needs a clear distinction of investment contracts and underlying assets sold, as they are often “unnecessarily conflated in the context of digital assets.”
The problem, according to the proposition, lies within “clarifying and codifying this kind of assets, that are not otherwise securities under the Act. They do not become security as a result of being sold or otherwise transferred according to an investment contract.” The proposition calls for a new type of asset class, dubbed “investment contract asset.”
The proposition comes just days before Federal Reserve Chairman Jerome Powell had to speak before the House in a hearing, which focused on central bank digital currencies (CBDC), stablecoins, and private cryptocurrencies.
“A dollar-based CBDC could reduce the need for the growing stablecoin niche and private cryptocurrencies like bitcoin,” Powell noted in the hearing.
When it comes to CBDCs, however, regulators prefer to “get it right” rather than release a rushed asset. Meanwhile, initiatives as the Digital Dollar project, led by former CFTC Chairman Christopher Giancarlo, already conducted a pilot program.
“Private cryptocurrencies have failed to live up to their promise,” Senator Elizabeth Warren commented, adding that she has more faith in a U.S. CBDC, which relates to the ability of the U.S. government to have control over the system.
In the past 24 months, U.S. regulators are working around the clock to put cryptos in a regulatory framework, as the market has exploded since the start of 2021. Prior to the latest massive rise of cryptocurrencies, the U.S. government did not seem particularly concerned about the crypto market.
However, U.S. President Joe Biden and his administration felt the pressure from China’s ongoing CBDC development, which means the U.S. has to create a broad framework for crypto regulation.
Meanwhile, the U.S. SEC is also examining multiple crypto-related exchange-traded funds (ETFs).
The latest regulatory push from the U.S. comes in line with what seems to be yet another $50 billion crypto market sell-off, which pushed the total market cap of digital currencies below $1.3 trillion.
Bitcoin, for example, dipped below $32,000, dragging projects like Ethereum (ETH) and Dogecoin (DOGE) down with it.