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US edges closer to digital asset regulation

By RAIN EDITORIAL TEAM - Jun 21, 7:00 PM

Last week in the midst of the volatility in the crypto market, the focus shifted from regulation and advancement in the space to worry and focus on price action, considerable policy moves were swept under the rug. Over the course of 2020 and 2021, the crypto market industry grew exponentially and investment in the industry flowed - which added emphasis on the need for oversight and regulation.  Both the industry boom and the subsequent volatility has had regulators and industry experts alike calling for regulation and oversight over the digital assets industry. 

Now considerable movement is being made on the regulation front in the United States and the process of creating a roadmap for the future of digital assets is on the way. US Senators Kirsten Gillibrand and Cynthia Lummis released the full version of their long-awaited regulation bill on Tuesday 7th June. The bill covers some of the most contested issues on cryptocurrencies - taxation, the role of stablecoins, exchanges, interoperability with the banking system and how to comply with AML and sanctions. 

The Gillibrand-Lummis legislation draft has grown considerably over the past few months after a draft version first surfaced in March. Three key areas have been solidified - consumer protection, payments and interagency cooperation. Even though most experts and industry leaders believe the draft bill is in need of work, there is a lot of positivity at this starting point and the major step taken for digital asset regulation across the United States. “A great jumping-off point,” wrote the Stellar Foundation’s chief legal officer, Candace Kelly. Jake Chervinsky, head of policy at the Blockchain Association, tweeted that “I & @BlockchainAssn are excited to continue working with both offices to make this bill the best it can be, & then to make it the law of the land.”

Another crypto-regulation bill is also being proposed by Senate Agriculture Chair Debbie Stabenow (D-Mich.) and Sen. John Boozman of Arkansas and is currently being drafted. Now with two bills on crypto regulation circulating around Washington, it seems that the road to regulation in the United States could come sooner than expected. It appears that major events and the volatility in prices, along with the massive surge in adoption across the US and the globe has added weight behind efforts in the US to regulate. 

The key piece in the United States is over who will govern and regulate the industry - with most lawmakers, industry experts and lobbyists pointing towards the Commodity Futures Trading Commission (CFTC). Both bills presented to congress have put the CFTC Washington’s top crypto regulator.  Many, including consumer advocacy organizations and financial watchdog groups, have argued that it’s a role better suited for the much-larger Securities and Exchange Commission (SEC). However, CFTC Chair Rostin Behnam has been pushing congress and speaking outwardly that the most widely traded digital assets, Bitcoin and Ethereum, carry the hallmarks of financial assets that fall under the CFTC. It is fair to say that, while the details and oversight bodies debate will rumble on, regulation is on the way sooner rather than later. 

What happens next? 

According to The Block, the US House of Representatives could be preparing to hear testimony on digital asset regulation on June 23 and entitled the "Future of Digital Assets Regulation". The hearing takes place as both the House and Senate Agriculture Committees, which oversee the Commodity Futures Trading Commission, are considering CFTC for oversight rather than the SEC.

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