Before the August session of the US Congress in 2023, lawmakers focused on multiple bills surrounding cryptocurrencies. The US Congress crypto regulation efforts 2023 aim to bring a lot more stability and clarity in the world of digital currencies and their future. Scroll through this article to discover the key aspects of the US congressional bills that can impact the future of cryptocurrencies.
Reintroduction of the Lummis Gillibrand Responsible Financial Innovation Act
The reintroduced Lummis Gillibrand Responsible Financial Innovation Act builds upon the previous bill proposed by the senators last year. It focuses on incorporating robust consumer protections and safeguards to fortify the industry against fraudulent activities and malicious players. It also creates a space for American innovators to flourish.
It attempts to place crypto assets within the regulatory scope by mandating registration for all crypto exchanges and addressing decentralized finance. Moreover, it is based on implementing stricter disclosure measures and limits on crypto asset lending.
This legislation also aims to strengthen consumer security. Moreover, it tackles the issue of wash sales and establishes clear criteria for determining the classification of crypto assets as either securities or commodities.
Alongside this, the legislation addresses the concern of crypto assets being used in illegal financial activities and introduces stricter penalties for willful violations of money laundering laws. Additionally, stablecoins will be required to have backing from deposits, further promoting stability in the market.
Establishing Clear Boundaries Related to SEC and CFTC
The ongoing debate over whether the SEC or CFTC should hold the reins as the primary regulator for crypto spot markets has been a topic of discussion for years. The argument stems from the lack of clear guidelines regarding the classification of tokens as securities or commodities.
While the SEC maintains that nearly all assets, other than Bitcoin, fall under the securities category, the cryptocurrency community and numerous congressional allies hold a contrary view. This has ignited significant efforts to draft legislation with the goal of establishing a set of criteria for determining whether they are a commodity or a security. These proposed bills would also formally designate digital assets as commodities. As a result, they will be subjected to the jurisdiction of the Commodities Exchange Act for the first time.
A mature stablecoin might jeopardize the government’s ability to monitor monetary policy. As a result, the issue of stablecoin legislation has sparked heated debate in Washington. There are also doubts surrounding the safety of top issuers, such as Tether and Circle, in the ever-growing industry.
As a result, lawmakers have been honing in on specific measures to regulate stablecoins, including outlining eligibility criteria for issuers and establishing guidelines for redeemability and collateral.
Recently, the House Financial Services Committee has made strides in this area, holding markups for two new bills, including the Clarity for Payment Stablecoins Act of 2023, introduced by McHenry.
According to prominent congressional critics, the primary purpose of crypto tokens is to trigger unscrupulous transactions. Despite industry opposition, there exists a need to prevent cryptocurrency misuse while also protecting the right to privacy. This revolves around adhering to the Bank Secrecy Act introduced by FinCEN.
Identifying when a company qualifies as a money-services business, making it subject to regulatory measures, is a critical step in this process. Therefore, the recent US crypto bill implications also revolve around preventing money laundering and other illicit activities in the world of digital currencies.
Keep Your Coins Act
The Keep Your Coins Act, which was proposed by Congressman Warren Davidson (R-Ohio), has made progress and is now headed to the House. The purpose of this bill is to safeguard an individual’s ability to manage their cryptocurrency independently. The bill contains a provision that prohibits federal agencies from limiting the use of convertible virtual currency for personal purchases.
Blockchain Regulatory Certainty Act
The Blockchain Regulatory Certainty Act, on the other hand, works towards protecting specific blockchain platforms from being classified as money service businesses. These measures were approved by the mostly Republican House, with bipartisan support from the Democrats. In contrast, the Financial Technology Protection Act was unanimously passed by both Republicans and Democrats.
As investors continue to navigate through the early stages of potential legislation, the path ahead remains shrouded in uncertainty. One particular bill, the FIT for the 21st Century Act, holds significant weight in its potential impact on the variety and availability of tokens on cryptocurrency exchanges.
If it is passed, it would bring much-needed clarity and stability to the market, likely resulting in a surge in digital asset prices. Furthermore, the approval of a stablecoin bill could further propel the market’s capitalization, accelerating the growth of these tokens.