House Republicans Propose Bill To Classify Crypto As Commodities – Senior House Republicans in the U.S. Congress have made a significant move to tackle the regulatory challenges surrounding digital assets. They have introduced a new draft bill with the intention of reclassifying digital tokens from securities to commodities. The leaders of the House Financial Services Commission and Agriculture Committee released this proposal to establish a more transparent framework and guidelines for the treatment of digital assets within the United States.
A crucial element of the proposed legislation revolves around the classification of digital assets as either commodities or securities. According to the “discussion draft,” regulated cryptocurrency firms that deal with tokens or cryptocurrencies will have the opportunity to argue that these assets should be classified as commodities. Nevertheless, in order to assert their claim, regulated crypto firms are obligated to furnish a comprehensive explanation of their operations and demonstrate their decentralization by certifying that no single entity controls more than 20% of the assets.
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Despite this provision, the Securities and Exchange Commission (SEC) would retain its authority to challenge the claim. They would conduct a thorough analysis to ascertain whether the asset falls under their jurisdiction. For crypto projects operating in the United States, the lack of clarity regarding the threshold of decentralization necessary for tokens to be exempted from being classified as investment contracts has been a longstanding source of dispute.
This new draft bill aims to tackle this issue by offering a precise definition of decentralization, thereby providing increased certainty for crypto projects operating within the country. Additionally, the draft bill proposes the creation of a new registered business category called a digital commodity exchange, which would be subject to oversight by the Commodity Futures Trading Commission (CFTC).
These exchanges would be required to adhere to the standard protections established by the agency, such as the segregation of customers’ assets, and implement measures to prevent market manipulation. With the inclusion of direct trading of crypto commodities, the CFTC would also gain expanded authority, further enhancing regulatory oversight in the crypto market. Moreover, the draft legislation emphasizes the Republicans’ attention towards studying the decentralized finance (DeFi) and non-fungible token (NFT) sectors.
This suggests that the regulation of these specific areas within the crypto economy might be addressed in future discussions. Congressman Patrick McHenry, the leading figure in drafting the bill, intends for it to act as a starting point for negotiations with House Democrats and Senate counterparts. This highlights the importance of bipartisan collaboration in shaping regulations for cryptocurrencies.
While the draft bill aims to address significant concerns raised by the crypto industry, it still requires support from Democrats, indicating the challenges in achieving consensus on the regulatory framework for digital assets. As discussions unfold, the impact of this proposal on creating a more inclusive and flexible environment for cryptocurrencies and digital tokens within the United States remains to be seen.