Inventory of key U.S. encryption laws: Where is the focus of regulation on the encryption market?

Author: BitpushNews Mary Liu

According to Forbes, since 2022, U.S. lawmakers have submitted at least 50 digital asset bills to Congress. These drafts cover the field of cryptocurrency regulation in a variety of ways, aiming to oversee everything from stablecoins to the jurisdiction of regulators. theme. This article will tease out several key bills that could have a significant impact on the crypto industry (if passed).

The Crypto Asset National Security Enhancement Act

Introduced July 21 by Senator Jack Reed and co-sponsored by Senators Mark Warner (D-Virginia), Mike Rounds and Mitt Romney (R-Utah), an initiative focused on money laundering and sanctions compliance The bipartisan bill, if approved, would have a major impact on the DEFI protocol.

Bill Highlights:

According to a copy of the draft, the bill aims to make DeFi protocols subject to the same rules as other U.S.-regulated financial intermediaries.

The bill would require anyone "in control" of a DeFi protocol to ensure an effective anti-money laundering program and adhere to know-your-customer (KYC) policies. DeFi protocol controllers will also be responsible for reporting suspicious activity and ensuring that anyone blocked by sanctions does not use the protocol.

If the agreement does not have an identifiable controller, the act makes anyone who invested more than $25 million in developing the agreement liable.

The bill proposes that under federal law, “virtual currency kiosks” such as bitcoin ATMs must comply with KYC laws, and that such ATM operators must “at a minimum verify and record the consumer’s name and physical address, which shall include verification of proof of nationality or residency.” official documents of the locality, which contain photographs of consumers".

prospect:

Miller Whitehouse-Levine, CEO of the DeFi Education Fund, believes that the legislation "will effectively ban the development of DeFi in the United States by forcing centralization." response, and also has the potential to undermine existing insight and influence of U.S. law enforcement into peer-to-peer cryptocurrency activity.”

However, anonymous sources in Congress revealed in an interview with Bloomberg that the bill is the result of a bipartisan effort, especially because its goal is to strengthen national security, which makes it more likely to win a full house vote.

21st Century Financial Innovation and Technology Act: Financial Innovation and Technology for the 21st Century Act

The bill, introduced by Republican members of the U.S. House of Representatives Agriculture and Financial Services Committee on July 20, aims to establish a reliable process for determining whether digital assets are commodities or securities, and if passed, would define the Commodity Futures Trading Commission (CFTC) once and for all. ) and the cryptocurrency regulatory role of the Securities and Exchange Commission (SEC).

The bill has the support of some key figures, co-sponsors include House Agriculture Committee Chairman Glenn Thompson (R-Pennsylvania), Rep. French Hill (R-Arkansas) and Rep. Dusty Johnson (R-S.D), with Hill leading the Inaugural Subcommittee on Digital Assets, Financial Technology and Inclusion, Johnson Leads Subcommittee on Commodity Markets, Digital Assets and Rural Development

staff meeting.

Bill Highlights:

The bill would give the Commodity Futures Trading Commission (CFTC) authority over digital commodities, including exchanges and broker-dealers. And clarify the jurisdiction of the Securities and Exchange Commission (SEC).

The legislation clarifies how digital assets are classified, stating that the mere existence of an investment contract does not make a token a security. About 70 percent of all crypto tokens should be classified as commodities rather than securities, putting them under the CFTC’s jurisdiction, the cosponsors wrote in a fact sheet released alongside the bill.

In addition, the process for crypto assets that have been marked as securities will also be re-marked as commodities, which may allow some projects that have been shut down due to past legal decisions to restart.

prospect:

The bill currently has significant support from influential committees, including the House Financial Services Committee, but lacks bipartisan support and could face opposition from House Democrats, many of whom believe the SEC should play a larger role than the bill currently allocates. greater effect.

"It didn't occur to us that there should be such strong support for the CFTC," Rep. Maxine Waters, D-Calif., said at a hearing on how to bring clarity to industry regulation.

Hilary Allen, a professor at American University's Washington School of Law, slammed the bill as a Republican attempt to "please" the crypto industry because it's not "the most pressing financial or agricultural issue facing the American public." Allen said that instead of focusing on the urgent FarmBill issue, House Republicans are racing to curry favor with crypto exchanges, Wall Street and Silicon Valley venture capitalists, at the expense of American consumers and retail investors. "

Responsible Financial Innovation Act (RFIA): Responsible Financial Innovation Act

Forbes reports that the RFIA reintroduced by Senators Cynthia Lummis (R-Wyoming) and Kirsten Gillibrand (D-NY) is the most comprehensive cryptocurrency bill with the deepest bipartisan support ever in the Senate.

The bill (also known as the Lummis-Gillibrand Act) has similar goals to the previous one, aiming to clarify the role of the SEC and CFTC in cryptocurrency regulation. According to the bill's fact sheet, the bill also aims to provide greater protection for consumers by enacting laws "to prevent the recurrence of FTX-style incidents."

Bill Highlights:

Impose mandatory segregation and escrow requirements on cryptocurrency exchanges to explicitly prohibit mixing of customer funds.

Sets limits on digital asset lending and authorizes the CFTC to regulate potential conflicts of interest between cryptocurrency exchanges and affiliates. Likewise, the legislation requires these companies to show proof of reserves.

To bring clarity to the industry by creating a new classification status (“ancillary asset”) for certain cryptocurrencies, which would include “digital assets that are sold under an investment Ancillary assets comply with SEC disclosure requirements, and they are regulated as commodities.

Clarity on the tax treatment of digital assets is also included, with the Federal Reserve to be ordered to process bank applications for crypto firm master accounts “on an equitable basis.”

The bill also considers depository institutions to be the only institutions allowed to issue stablecoins, will add a definition of a decentralized autonomous organization (DAO) to the tax code, and commission an advisory committee and a series of regular reports on the industry.

prospect:

The 2022 version of the Lummis-Gillibrand bill gained significant traction in the last Congress, but the FTX debacle put the proposal on hold. Lummis, a crypto proponent who bought her first bitcoin back in 2013, has also been dubbed the Senate's "Crypto Queen" for her innovation in establishing Wyoming as a hub for cryptocurrency miners and entrepreneurs. Center played an important role. Bipartisanship was incorporated into the bill, which could help its prospects for passage.

Digital Asset Market Structure Bill (DAMS): Digital Asset Market Structure Bill

Introduced on June 1, DAMS is another bill that seeks to define the crypto-related roles of the SEC and CTC and establish a framework for regulators to determine whether certain cryptocurrencies are securities or commodities.

The bill has drawn some attention, with Rep. Maxine Waters sending a June 26 letter to Treasury Secretary Janet Yellen and SEC Chair Gary Gensler asking for their comments on the bill.

Under the proposed bill, before a cryptographic token can be granted commodity status, it must be certified by the SEC to demonstrate that it is sufficiently decentralized.

Cryptocurrency exchanges will be able to register with the SEC as Alternative Trading Systems (ATS), and regulators will not be able to deny registration as a platform for trading digital assets. DAMS will clarify ATS rules and allow digital commodities and stablecoins to be traded on ATS platforms, and the SEC will be required to allow broker-dealers to custody cryptocurrencies subject to compliance.

Digital Commodity Exchange Act (DCEA): Digital Commodity Exchange Act

An updated version of the DCEA, first introduced in September 2020 and amended in April 2022, stipulates that stablecoin providers can register as "fixed-value digital commodity operators," which includes record-keeping and reporting requirements.

The act gives the CFTC the authority to register and regulate spot exchanges, which follow the same rules as other commodity exchanges. In the process, the bill would redefine cryptocurrencies, which are not considered securities, as digital commodities, while the SEC would oversee the issuance of crypto-securities.

Cryptocurrencies that are not considered securities are labeled as digital commodities under the CFTC's purview, and the SEC will regulate the issuance of crypto-securities.

Crypto project developers can also voluntarily register with the CFTC, submitting the disclosures required to publicly trade and list their assets on exchanges.

Other Acts

There are also some encryption bills that are under consideration in Congress and have received varying degrees of support, such as the Stablecoin Trust Act and the Stablecoin Innovation and Protection Act related to stablecoin regulation, the Encryption Consumer Investor Protection Act and the Encryption The Currency Exchange Disclosure Act was introduced in December 2022, but has not moved much since.

Senators Elizabeth Warren and Roger Marshall also proposed the Digital Assets Anti-Money Laundering Act in December last year, which would regulate encrypted ATMs and ban financial companies from using encrypted mixers. Warren said in February that he would reintroduce the draft, But no action has been taken.