Republican legislators issued a draught bill on Friday that would establish a clearer regulatory strategy for crypto assets and exchanges, allowing digital assets to be traded on more traditional trading platforms and introducing a split of responsibility between the top two U.S. financial regulators.
The discussion draught was co-authored by Reps. Patrick McHenry, R-NC, and Glenn Thompson, R-PA, and would offer the Commodity Futures Trading Commission specific spot market power over crypto commodities under current law.
Digital-asset securities would be regulated by the Securities and Exchange Commission.
According to a draught description, the bill would ban the SEC from preventing an alternative trading system, or ATS, from listing crypto securities and would force the SEC to “modify its rules to allow broker-dealers to custody digital assets.
The measure establishes a clearer framework for the registered offer and sale of digital assets. The SEC has brought various enforcement proceedings against American crypto organizations, including Gemini, Genesis, and Kraken, claiming they engaged in the unregistered offer and sale of securities.
A crucial exception for DeFi — or decentralized finance — assets would allow SEC-certified assets to be free from registering as securities.
Crypto exchanges have been pushing for regulatory clarification in the aftermath of broad enforcement measures that have forced companies and developers to relocate operations outside of the United States. Both Coinbase and Gemini have declared offshore exchange operations.
Coinbase is also embroiled in a bitter legal battle with the SEC on the identical issues that spurred the McHenry-Thompson measure. The SEC sent the cryptocurrency exchange a Wells notice, which is a warning of impending enforcement action, earlier this year.
The draught bill will most certainly be reshaped and tweaked in the next weeks and months, but it represents a strong vote of support from two prominent Republican lawmakers.
