Unleashing the Crypto Revolution
Proposed Legislation Could Eliminate Securities and Exchange Commission's Monitoring of Leading Cryptocurrencies
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In a groundbreaking move, the latest draft of the crypto market structure bill published by the House Financial Services Committee seeks to remove the Securities and Exchange Commission's (SEC) oversight over most digital assets.
The bill aims to revise antiquated securities laws enacted in the 1930s by introducing criteria that would exempt digital assets from the definition of securities. Notably, it would shift the regulation of the secondary market trading of many digital assets from the SEC to the Commodity Futures Trading Commission (CFTC).
The revised bill defines digital commodities in such a way that encompasses several popular crypto assets. These assets can originate from a blockchain system, derive value from the system, participate in decentralized governance, or serve as validation tokens for blockchain transactions.
Moreover, secondary market trading of these digital commodities, provided they are certified by the SEC as originating from a "mature blockchain system," would evade SEC regulation under the new bill.
The question lingers: What constitutes a "mature blockchain system"?
According to the bill, such a network must allow users to execute transactions, access services, operate nodes, or validate transactions, while being open-source, open to public use, automated, and resistant to control by a single person or entity. Furthermore, no individual or entity can hold more than 20% of the supply of a specific token for the network to be considered mature.
However, the exemption for secondary transactions related to digital commodities issued by mature blockchain systems would not apply if the transactions involved purchasing an ownership interest in the issuer's revenues, profits, or assets-known as institutional offerings.
Remarkably, tokens like Ethereum, Solana, XRP, BNB, and Cardano appear to meet the definition of digital commodities, and their respective networks seem to qualify as mature blockchain systems. Nevertheless, a potential issue arises with XRP-as Ripple, the founders of XRP, control significantly more than 20% of the token's supply. This might imply that secondary trading of XRP would still fall under securities laws. However, the bill specifies that tokens held in escrow or only meeting "some" of the mature blockchain system requirements could potentially be exempted by the SEC on a case-by-case basis.
The emergence of the market structure bill precedes a crypto-centric meeting of the House Financial Services Committee on Tuesday. Interestingly, Democrats on the committee plan to stage a walkout in protest, intending to thwart the hearing due to the absence of clauses restricting the president from participating in crypto ventures while in office. This news was first reported by Punchbowl News.
S spectrum remains committed to keeping you informed about the latest developments in the crypto space. Stay tuned for more updates.
Note: The "mature blockchain system" definition emphasizes the importance of decentralization, with sources suggesting a value and development focus as secondary considerations.
Daily Digest Newsletter
Written by Andrew Hayward (with a touch of AI assistance)
- The latest crypto market structure bill proposal seeks to remove the Securities and Exchange Commission's (SEC) oversight of most digital assets.
- The bill aims to revise antiquated securities laws from the 1930s by defining digital commodities and shifting the regulation of their secondary market trading from the SEC to the Commodity Futures Trading Commission (CFTC).
- Digital assets that originate from a blockchain system, derive value from the system, participate in decentralized governance, or serve as validation tokens for blockchain transactions are considered digital commodities.
- Secondary market trading of such digital commodities, provided they are certified by the SEC as originating from a "mature blockchain system," would evade SEC regulation.
- A "mature blockchain system" must allow users to execute transactions, access services, operate nodes, or validate transactions, while being open-source, open to public use, automated, and resistant to control by a single person or entity, and no individual or entity can hold more than 20% of the supply of a specific token.
- The bill does not exempt secondary transactions related to digital commodities issued by mature blockchain systems if the transactions involve purchasing an ownership interest in the issuer's revenues, profits, or assets (institutional offerings).
- Notably, popular digital assets like Ethereum, Solana, XRP, BNB, and Cardano seem to meet the definition of digital commodities, and their respective networks might qualify as mature blockchain systems.
- However, XRP's secondary trading may still fall under securities laws since Ripple, its founders, control significantly more than 20% of the token's supply.
- The bill speculates that tokens held in escrow or only meeting "some" of the mature blockchain system requirements could potentially be exempted by the SEC on a case-by-case basis.
