The US has made significant strides towards the regulation of crypto after a congressional committee collectively agreed on a bill that would help develop a regulatory framework.
The House Financial Services Committee passed the bill in Capitol Hill yesterday as the bill will help to bring greater transparency and clarity over whether or not a crypto token or digital asset is deemed a security, something which has been highly contentious with the Securities and Exchange Commission (SEC) over the last year.
Whilst the SEC will be handed jurisdiction over any proposed regulatory framework, alongside the Commodity Futures Trading Commission (CFTC), the financial regulator has been criticised by the crypto industry over its handlings of regulatory oversight.
One of those critics was Republican Congressman Ritchie Torres – one of the party’s representatives who assisted the committee in passing the bill – who called for the SEC to be investigated over its ‘haphazard and heavy-handed’ handling of crypto exchanges.
The bill passed will now be voted by the House of Representatives before moving to a Senate committee. This regulatory bill marks the first meaningful progression of crypto regulation in the country, which companies in the crypto sector have been calling for.
Patrick McHenry, Republican Chair of the House Financial Services Committee, stated: “As other jurisdictions like the UK, European Union, Singapore and Australia have moved forward with clear regulatory frameworks for digital assets, the United States is at risk of falling behind. We intend to change that today.”
It is clear to McHenry that the US feels as if it is falling behind other countries in its efforts to regulate crypto and the digital asset sector, with the UK for instance, passing the Financial Services and Markets 2023 act to recognise cryptocurrencies as financial instruments.
Crypto regulation has been the topic of intense discussion between world governments since last year’s turbulent events in the industry, which resulted in many collapses to companies such as FTX, Celsius and TerraLuna leading to a market crash and billions of dollars worth of crypto lost.
The SEC has become the one agency who appeared to have become heavily stringent on its guidelines surrounding crypto exchanges and the tokens they were circulating, as it was adamant that most tokens were viewed as securities and therefore were to fall under regulatory oversight.
This led to the SEC suing some of the largest crypto exchanges and companies such as Binance, Coinbase and Ripple Labs.
Despite its vigilant approach, after a two-and-a-half court battle, Ripple was recently able to score a victory over the financial regulator as a New York judge ruled that its XRP token is ‘not a security’, which may bring positive outcomes for Binance, Coinbase and the rest of the US crypto community.
The crypto bill will have to pass the Senate before it comes into effect and the Republicans – who are mostly in favour of the bill – are optimistic about its passing with the support of a Democratic-led Senate.
However, leading Democratic figure of the Financial Services committee Maxine Waters has been vocal of her opposition to the bill, believing it will create more confusion for the crypto industry and create even less security for investors.
