On July 26th, in a session held in the US House of Representatives, a bill prepared by cryptocurrency advocates to establish a clear regulatory framework in the country was approved. The House Financial Services Committee, with a vote of 35-15, approved the bill led by Republicans, with some Democrats also voting in favor.
Republicans had warned that cryptocurrency companies would move to overseas regions without clear regulation, and after the US court’s decision in the Securities and Exchange Commission’s (SEC) case against XRP last week, they introduced some changes to the bill to present its final version as a landmark crypto bill.
The approval of the bill by the House Financial Services Committee means that the first stage has been passed. Passing the first step is a victory for crypto supporters as it will prevent the SEC from taking harsh actions against the industry due to the lack of clarity in current regulations, especially after the collapse of leading cryptocurrency companies like FTX.
During the session, Chairman Patrick McHenry from North Carolina of the House Financial Services Committee praised the potential of cryptocurrencies, stating, “This is a software revolution, and if done correctly, it is a financial revolution.”
Now, the House Agriculture Committee, led by Pennsylvania Republican Glenn Thompson, will review the bill’s section today. This section includes providing an additional budget of $120 million to the US Commodity Futures Trading Commission (CFTC). The additional budget will give new powers to the CFTC to regulate the asset class as specified in the legislation.
The bill approved by the House Financial Services Committee aims to establish guidelines for cryptocurrency companies to register with the SEC or CFTC. It also paves the way for the CFTC to regulate cryptocurrencies as commodities while outlining a process for digital asset creators to prove to the SEC that their blockchain networks are sufficiently decentralized. The bill also requires the two regulatory agencies to work together in creating rules and mandates them to work on topics such as NFTs and decentralized finance (DeFi).
The bill explicitly states that a cryptocurrency should not be automatically considered a security just because it is sold as part of an investment contract. This revision was made following the recent court decision in favor of Ripple in the case brought by the SEC. Republicans hope that this decision will support the efforts to create new laws and demonstrate the need for such legislation to Democrats.
The bill had drawn criticism from SEC Chairman Gary Gensler, who argued that the existing rules were sufficient to determine whether a cryptocurrency is a security. Gensler claimed that there was no need for new regulations.