The US House Financial Services Committee Chair, Patrick T. McHenry, intends to hold a vote on a bill that would regulate digital assets by the middle of July. The bill in question, the Digital Asset Market Structure Discussion Draft, would classify cryptocurrencies as either a security or a commodity and regulate exchanges. Additionally, it would create a framework that would give the Commodity Futures Trading Commission jurisdiction over digital commodities, while clarifying the Securities and Exchange Commission’s jurisdiction over “digital assets offered as part of an investment contract.”
McHenry stated that he wants to ensure a bipartisan process and will hold a House Financial Services Committee hearing on Tuesday. He also mentioned that the bill is still in its draft stage and that there is enough time for members to find common ground. However, he intends to mark up some form of legislation when the committee returns from the July 4 recess. The House goes back on July 11.
The former chair of the House Financial Services Committee, Maxine Waters, D-Calif., expressed her concerns about the bill, stating that it “appears to halt any enforcement actions by the SEC against crypto firms, even when they have committed fraud.” She also mentioned that this provisional registration could reward bad actors with a get-out-of-jail-free card and allow them to continue harming consumers and investors.
Recent Lawsuits by SEC
The hearing comes a week after the SEC sued crypto exchanges Binance and Coinbase, causing the industry to go on the defensive. The SEC accused Coinbase of operating its platform without being registered as an exchange broker or clearing agency. The agency also accused Binance and its CEO, Changpeng Zhao, of multiple offenses, including misleading investors and unlawfully operating as an exchange. SEC Chair Gary Gensler argued last week that exchanges can register with the agency, despite platforms’ assertions that it was not possible.
The proposed Digital Asset Market Structure Discussion Draft aims to regulate digital assets by classifying them as either a security or a commodity and regulating exchanges among other measures. While some express concerns about the bill, McHenry intends to ensure a bipartisan process and markup some form of legislation when the committee returns from the July 4 recess. The recent lawsuits by the SEC against Binance and Coinbase also highlight the need for proper regulation of the cryptocurrency industry.