Attempts to regulate the Crypto industry through legislation are in full gear following the crafting of a bipartisan Crypto bill by Sen. Kirsten Gillibrand (D.-N.Y.) and Sen. Cynthia Lummis (R.-Wyo.). The new law attempts to mandate the Securities and Exchange Commission and the Commodity Futures Trading Commission (CFTC) to oversee some aspects of the $1.4 trillion market on a bearish streak.
This is not the first attempt to enact legislation to guide and harmonize aspects of the Crypto space. The bill sponsored by Democrats and the Republicans in the House of Representatives sought to lift some stringent regulations in the Crypto market.
Disclosure is Prescribed in the Bill
The most outstanding provision of the Crypto Regulation Draft is that Crypto issues whose tokens attract a daily trading volume exceeding $5 million will be required to disclose their operations to the SEC. The regulatory body will collect information regarding ‘entrepreneurial or managerial efforts’ underlying the determination of the trading price. Therefore, the token will be defined not as a security but as a commodity regarding the nature of the disclosure.
The CFTC would afterward be mandated to oversee Crypto trading and ensure that traders are protected.
There is an Attempt to Revive Crypto SRO and Support Stablecoins
The other provision of the bill is to foster the creation of the Crypto Self-Regulatory Organization (SRO). The structure and the mandate will be the same as that of the Financial Industry Regulatory Authority, or FINRA. In such an environment, the SRA will be empowered by some government orders to enforce some ethical practices for its members to ensure that the rights and privileges of all stakeholders, such as Crypto investors, are upheld.
Further, the 75-page document provides guidelines for banks and other entities to roll out Stablecoins. These are digital tokens backed by assets such as fiat currencies or commodities such as oil.
The Bill is Being Revised as Feedback Streams in From Stakeholders
Some bill provisions are inconsistent with some long-held cryptocurrencies’ assumptions. For instance, Blockchain Association Executive Director Kristin Smith notes that the Blockchain community is skeptical of a CFT, SEC, and SRO controlling on the assumption that regulation could stifle the nascent industry’s development.
From the SEC’s perspective, the Chair, Gary Gensler, has affirmed on numerous occasions that Cryptos are securities and not commodities as the new bill assumes. The bill may be headed for a headwind with a history of the congress being receptive to stakeholders’ perspectives regarding any policy-making process.
Sen. Gillibrand, through her spokesperson, confirmed that they are onboarding stakeholders’ inputs. She also believes that the bill will stir up the accessibility, innovation, and flexibility of Cryptos while prioritizing consumer protection.