The Future of US Cryptocurrency May Depend on These 4 Digital Asset Bills

By JESSE COGHLAN. COINTELEGRAPH; compilation: Songxue, Golden Finance

According to reports, at least 50 digital asset bills have been introduced to Congress since 2022, aiming to govern everything from stablecoins to the jurisdiction of U.S. regulators.

However, given lawmakers’ focus on the cryptocurrency industry, at least four of these bills are believed to have the potential to significantly impact the industry if passed.

The 21st Century Financial Innovation and Technology Act

Introduced on July 20, the bill aims to establish a reliable process for determining whether a digital asset is a commodity or a security and clarify the jurisdiction of regulators.

The bill, introduced by Republican members of the U.S. House of Representatives Agriculture and Financial Services Committee, would give the Commodity Futures Trading Commission (CFTC) authority over digital commodities and clarify the jurisdiction of the Securities and Exchange Commission (SEC).

Introducing the Financial Innovation and Technology for the 21st Century Act. The bill establishes a regulatory framework for digital assets, protects consumers, fosters innovation, and positions the United States as a leader in finance and technology. #crypto

— House Agriculture Committee (@HouseAgGOP) July 20, 2023

The process for crypto assets that have been marked as securities will also be re-marked as commodities — which could lead to the restart of some projects after they were effectively shut down by past legal decisions.

Responsible Financial Innovation Act (RFIA)

A bill with similar goals (known as the Lummis-Gillibrand Act, or RFIA) seeks to clarify the roles of the SEC and CFTC in cryptocurrency regulation. According to the bill's fact sheet, the bill also aims to provide greater protection for consumers by creating laws "to prevent the recurrence of FTX-style incidents."

The crypto asset industry is here to stay.

Today, @SenGillibrand and I are reintroducing landmark legislation to create a federal regulatory framework that will enable cryptocurrency businesses and investors to thrive in the United States, while protecting consumers from bad actors. pic.twitter.com/z2pr0evWt2

Clarity on the tax treatment of digital assets is also included, with the Federal Reserve to be ordered to process bank applications for crypto firm master accounts “on an equitable basis.”

It will also deem depository institutions as the only ones allowed to issue stablecoins, will make room in the tax code for decentralized autonomous organizations (DAOs), and commission an advisory board and a series of regular reports on the industry.

Digital Asset Market Structure Act (DAMS)

Introduced on June 1, DAMS is another bill that seeks to define the crypto-related roles of the SEC and CTC and establish a framework for regulators to determine whether certain cryptocurrencies are securities or commodities.

The bill has drawn some attention, and Rep. Maxine Waters (D-R-R) sent a June 26 letter to Treasury Secretary Janet Yellen and SEC Chair Gary Gensler asking for their comments on the bill.

#RELEASE: Senior member @RepMaxineWaters calls on @USTreasury, @SECGov to share analysis of Republican digital asset market structure bill | pic.twitter.com/qbPNMSRl5v

— US House Financial Services Committee (@FSCDems) June 26, 2023

Under the proposed bill, before a cryptocurrency could be granted commodity status, it would have to be certified by the SEC to demonstrate that it is sufficiently decentralized.

Cryptocurrency exchanges will be able to register with the SEC as Alternative Trading Systems (ATS), and regulators will not be able to deny registration as a platform for trading digital assets.

Cryptocurrency company Prometheum is an SEC-registered ATS that offers trading, clearing, settlement and custody services for digital assets, although it is unclear which assets the SEC will allow.

DAMS will clarify ATS rules and allow digital commodities and stablecoins to be traded on ATS platforms, and if the requirements are met, the SEC will be required to allow broker-dealers to custody cryptocurrencies.

Digital Commodity Exchange Act (DCEA)

The updated version of the DCEA, first rolled out in September 2020 and last re-launched in April 2022, added that stablecoin providers could register as "fixed-value digital commodity operators," including record-keeping and reporting requirements.

The DCEA empowers the CFTC to register and regulate spot exchanges, which follow the same rules as other commodity exchanges.

1/ We are proud to support the reintroduction of the Digital Commodity Exchange Act (DCEA). With growing consensus in Washington that federal oversight of digital asset spot markets is needed, we believe the DCEA presents a smart framework…

— Blockchain Association (@BlockchainAssn) April 28, 2022

Cryptocurrencies that are not considered securities are labeled as digital commodities under the CFTC's purview, and the SEC will regulate the issuance of crypto-securities.

Crypto project developers can also voluntarily register with the CFTC, submitting the disclosures required to publicly trade and list their assets on exchanges.

Other bills

More cryptocurrency bills are under consideration in Congress with varying degrees of success. Stablecoin regulatory proposals have passed the Stablecoin Trust Act and the Stablecoin Innovation and Protection Act.

The descriptive Crypto Consumer Investor Protection Act and the Cryptocurrency Exchange Disclosure Act were introduced in December 2022, but not much progress has been made since then.

Senators Elizabeth Warren and Roger Marshall also introduced the Digital Assets Anti-Money Laundering Act in December, which would regulate crypto ATMs and ban financial firms from using crypto mixers. Warren vowed to reintroduce the measure in February, but has yet to act.