The U.S. House of Representatives has passed a bill mandating that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) jointly establish a digital asset regulation working group to assess the state of current regulatory frameworks and make suggestions for future improvement.
The working group is to be composed of both the SEC and the CFTC, as well as relevant business representatives, academics and investor protection organizations. According to the bill, dubbed the Eliminate Barriers to Innovation Act of 2021, requires the working group to jointly produce a report, within a year of the bill’s enactment, on the current state of digital asset regulation in the United States. Specifically, the report is to focus on the impact that lack of regulatory clarity is having on the industry and how current regulatory regimes are impacting the country’s competitive position relative to those of other countries.
The working group must also build recommendations for future regulatory change. In particular, the recommendations should focus on the development of primary and secondary markets for digital assets with a focus on “the fairness, orderliness, integrity, efficiency, transparency, availability and efficacy of such markets.” They must also include recommended standards and best practices concerning the reduction of fraud and market manipulation and ways to improve anti-money laundering and anti-terrorist financing compliance.
The bill still needs to be approved by the Senate before being enacted into law.
The initiative itself is notable, but what is more interesting is the context. Both the SEC and the CFTC have made waves in recent months by increasingly taking action against non-compliant and criminal activity in the sector, which many have taken as a sign of coming regulatory scrutiny. Lawmakers given similar signals, passing a significant anti-money laundering law reform in January of this year which bring digital asset operators further within the ambit of the current AML regime.
Fittingly, this announcement also comes in the same week that CFTC commissioner Dawn Stump advocated for more clarity on the responsibility of the various regulators that oversee facets of the digital asset industry. She warned against mistaking CFTC enforcement as a sign that the CFTC has complete regulatory power over digital assets or that regulation in the industry is complete.
The establishment of the working group is in keeping with everything we have seen from regulators and lawmakers over the past year. Lawmakers seem motivated to develop the law surrounding the digital asset industry in a way which promotes law-abiding activity and gives regulators and law enforcement the tools they need to govern it.
See also: Rep. Patrick McHenry discusses “Blockchain Policy Matters” with Bitcoin Association’s Jimmy Nguyen
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