The United States House Committee on Agriculture organized a hearing entitled The Future of Digital Assets: Providing Clarity for Digital Asset Spot Markets. Committee Panel 1 had Rostin Behman and Panel 2 included J Christopher Giancarlo, Paul Grewal, Dan Gallagher, Dan Berkonitz and Walt. The hearing highlighted the importance of blockchain technology and digital assets.
The opening remarks by Honourable Glenn Thompson, Chairman of the House Committee on Agriculture underlined the importance of blockchain technology and digital assets. He underlined that the technology played an extensive role in improving banking and financial services providing data privacy and improving supply chain logistics, these technologies have the potential to transform America.
The committee previous year agreed to embark on a joint effort to work collaboratively and craft a comprehensive digital asset market structure framework. Glenn highlighted that Regulation by enforcement is not an appropriate way to govern a market, adequately protect customers, or promote innovation.
He mentioned that the members of the committee should work together to pull together a better framework for digital asset regulation that promotes customer protection, provides clear lines of authority to regulators, and allows the regulated to clearly understand their obligations under the law.
The topic of the hearing was the draft bill authored by committee chair Glenn Thompson and House Financial Services Committee Chair Patrick McHenry. In a discussion draft published on June 2, lawmakers proposed “establishing a functional framework” aimed at providing regulatory clarity for crypto firms in the United States.
The draft bill would prohibit the U.S. Securities and Exchange Commission (SEC) from denying digital asset trading platforms from registering as a regulated alternative trading system and allow such firms to offer “digital commodities and payment stablecoins.”
Introduced by House Financial Services Committee Chair Patrick McHenry and House Agriculture Committee Chair Glenn Thompson, both Republicans, the legislation lacked input from lawmakers on the other side of the political opinion. Democrats and Republicans have sometimes demonstrated a willingness to have a bipartisan approach to crypto regulation, but it’s unclear how far the proposed legislation could advance in a divided Congress.
Democratic committee members showed some signs of baulking. The bill was described as “incredibly complex,” by the Democrats. Thompson highlighted that the bill is the need of the hour. The Act also requires the SEC to modify its rules to allow broker-dealers to custody digital assets, if they meet certain requirements,” said the draft. Additionally, the Act would require the SEC to write rules to modernize certain regulations for digital assets.
Behnam crucially pointed out that the bill should not impact existing law, and it does not shift existing authorities. It should cover gaps, especially in the spot market for digital assets that are not securities.
It is considered that the bill would change the method of defining securities and commodities to one based on how the asset was traded and the level of decentralization. The bill would also create new definitions of digital commodity brokers and dealers without altering the core components of market structure.
