Republican lawmakers released a draft bill on Friday that would provide cryptocurrency assets and exchanges a clearer regulatory plan, allowing digital assets to be traded on more conventional trading platforms and establishing a division of authority between the top two U.S. financial regulators. Reps co-authored the discussion draft. Patrick McHenry, R-N.C., and Glenn Thompson, R-Pa. Would grant the Commodity Futures Trading Commission explicit spot market authority over crypto commodities under existing law. SEC would regulate digital-asset securities. The bill would “prohibit the SEC” from preventing an alternative trading system, or ATS, from listing crypto securities and would require the SEC to “modify its rules to allow broker-dealers to custody digital assets,” according to a draft summary.
The bill aims to clarify the registration process for selling and offering digital assets. The SEC has taken several enforcement actions against American crypto entities – including Gemini, Genesis and Kraken – alleging unregistered offerings and sales. A key carve-out for DeFi — or decentralized finance — assets would allow SEC-certified assets to be exempt from registering as securities. Crypto exchanges have called for regulatory clarity in the wake of expansive enforcement actions that have left companies and developers scrambling to move operations beyond the U.S. Crypto exchanges Coinbase and Gemini have both announced off-shore exchange operations. Coinbase is also battling the SEC over the issues that apparently prompted the McHenry-Thompson bill in court. Earlier this year, the SEC issued a Wells notice, a warning that enforcement action would be taken. A draft bill will probably be revised and reshaped in the coming months, but it represents two influential Republicans’ strong support.
