New Regulation Proposed for Cryptocurrencies
September 3, 2021
Recently Representative Don Beyer introduced a new bill Digital Asset Market Structure and Investor Protection Act into Congress, which is aimed to create a legal framework to regulate digital assets. Here are some of the bill’s significant proposals:
Define digital assets and digital asset securities. The bill proposed to differentiate digital assets and digital asset securities by certain attributions, such as dividend rights, voting rights and issuance through an initial coin offering. Tokens fall within the definition of digital asset securities will be regulated by the Securities and Exchange Commission and other digital assets will be regulated by Commodity Futures Trading Commission. Issuers that believe their tokens do not have those attributions will have an option to file a desecuritization certification to have their tokens regulated as commodities.
Restrict the issuance of stablecoins. The bill proposed to give the Secretary of the Treasury a right to approve or disapprove a person wishing to issue a digital asset fiat-based stablecoin, and such right will extend to stablecoins issued prior to the effectiveness of this bill. Companies interested in issuing stablecoins in the U.S. should consider the potential requirements it will need to meet to get the requisite approval.
Establish a digital asset trade repository. With respect to a digital asset transaction that is not recorded on the public distributed ledger, the bill required it to be reported to a CFTC registered digital asset trade repository within 24 hours of such transaction.
Raise consumers’ awareness regarding the status of digital assets. The bill directed the Federal Deposit Insurance Corporation, National Credit Union Administration, and Securities Investor Protection Corporation to issue notice to ensure consumers are aware of the difference between digital assets and deposits and that digital assets are not covered by federal deposit insurance or Securities Investor Protection Corporation insurance.
As this bill is still in its early stage, we will need to wait and see how it will progress as it moves through the legislative process.