A U.S. congressman is doing the latest work to clarify which U.S. regulators are responsible for which digital assets.
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On March 9, Congressman Paul Gosar (R-AZ) introduced the 2020 Cryptocurrency Act, which aims to orchestrate various digital assets in response to appropriate regulatory agencies.
Proposed regulatory scheme
As Gosar's legislative assistant Will Stechschulte explained to Cointelegraph,
"The bill must not only provide clarity for crypto assets in the United States, but also make them legal."
Gosar's proposal divides digital assets into three categories: crypto commodities, cryptocurrencies, and crypto securities. These three categories are overseen by the US Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC) of the US Treasury.
Interestingly, the wording of the bill seems to cement the position of digital assets such as Bitcoin as crypto commodities rather than cryptocurrencies. According to the bill, "cryptocurrency" is classified as "representation of US currency or synthetic derivatives", which is more reminiscent of stable currencies such as Tether (USDT).
The language behind crypto securities is still familiar:
"All debt, equity and derivatives that rely on the blockchain or distributed crypto ledger."
As for non-homogeneous tokens (NFT), the bill did not mention them.
The bill has been updated since last December
The bill is an updated version of the bill first leaked last December. This updated bill expands definitions of terms such as "decentralized encrypted ledger" and "smart contracts", a concept that US lawmakers are struggling with.
Perhaps more importantly, the updated bill is clearer on identifying "primary" rather than "only" regulatory responsibilities. The exact meaning remains to be seen, but this change could weaken the legal status of cryptocurrency companies, who believe that the SEC has no authority to regulate it.
Industry stakeholders participate in drafting
Going against traditional congressional practice, Gosar proposed the bill on its own without co-sponsors. Stechschulte told Cointelegraph: "As an introduction, this will be Gosar. […] After the introduction, we hope to get some serious support."
Ben Goldey, Gosar's communications director, explained the importance of industry involvement before legislative approval:
"Because this is a niche issue, we work with stakeholders and external groups / experts to better understand the clarity needed by the industry. Before choosing co-sponsors, we chose to get stakeholder support. "
One of the industry participants involved in drafting the bill was pioneer Bitcoin investor Erik Finman.
Finman said in an interview with Cointelegraph that he initially contacted Gosar's team to develop the bill because "I like their bravery and are strong in everything."
Regarding the history and development of the bill since its release in December, he said that many participants weighed it:
"That leaked bill, we tried a few things later, this is our second draft. We still have 32 versions."
In the past year, many new draft bills have appeared, especially against the white paper released by Facebook for Libra. Fears that fear of SEC regulation could change Libra's original vision of managing securities based on a "currency basket."
However, the bill closest to Gosar's new bill is Warren Davidson's (R-OH) token taxonomy, which was first introduced in 2018 and later updated and reintroduced in April 2019.
Finman believes that the token taxonomy has stalled. He also talked about the new Cryptocurrency Act,
"I think it's a little bigger in scope."