Proposed US Law to Define Crypto Assets and Crypto Securities
US lawmaker and Democrat, Don Beyer has submitted a proposal seeking to map out regulations on crypto assets and crypto securities. The proposal will also define these assets, even as calls for regulations in the US are on the rise. Don Beyer entitled the proposal as ‘The Digital Asset Market Structure and Investors Protection Act of 2021.’
Lately, there have been calls from both individuals and institutions in the US for general regulations guiding the use and adoption of cryptocurrencies. Beyer’s proposal is seemingly a response to these calls. One of the foremost aims of the proposed law is to clearly define crypto assets and crypto assets securities. In light of this, crypto assets will fall under the control of the Commodity Futures Trading Commission (CFTC), while the latter will be regulated by the US SEC.
Proposed Law Highlights Roles of SEC and CFTC on Regulations
The proposed law is directed at shedding light on the otherwise unclear areas of cryptocurrencies, which have been subjected to debates in the US for a long while. As such, the SEC and the CFTC will be saddled with the responsibility of unpacking regulation-wise top cryptocurrencies in the market in terms of market value and transaction volume.
Also, some provisions in the proposal will address the question of categorizing crypto assets and crypto assets securities. The Bank Secrecy Act makes provision requirements for classifying both assets. In line with the Act’s provisions, they will be categorized as financial instruments to foster accountability, AML regulations and reporting.
As regards CBDCs, provisions in the proposal are such that the issuance of this type of digital currency will be the exclusive preserve of the US Federal Reserve. Interestingly, it also clamors for vesting a power on the US Treasury Secretary to either allow or disallow the use of the Dollar and fiat-backed stablecoins.
Proposed Law Urges Relevant Bodies to Outline Limits of Insurance on Crypto Assets
According to the proposal, relevant financial bodies will shed light on the unclear parts as it relates to the non-coverage of crypto assets. This is so that investors can know the limits of insurance regulations on these assets. To forestall fraudulent cases, the proposed law makes provision that crypto assets not registered on a public blockchain should be reported to a repository recognized by the CFTC.
Meanwhile, Treasury Secretary Janet Yellen has been hammering on the need for regulations guiding the use of stablecoins. Yellen had said allowing stablecoins to operate unregulated was detrimental to the US Dollar. She also noted that they were being used to evade taxes and aid illicit activities.
Regulations have been a major subject in the US. Two weeks ago, US Senator Elizabeth Warren issued a deadline to Gary Gensler, head of the US SEC, to provide a plan for regulations on crypto. Gary has himself acknowledged the need for regulations in order to protect investors. President Biden recently introduced an infrastructure bill that will be funded by crypto taxes.
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