Review of recent cryptocurrency-related bills in the U.S. Congress

Recently, the U.S. Congress is voting on a number of cryptocurrency-related bills. These bills can greatly improve the clarity of industry regulation. If the relevant bills are passed smoothly, they may become a milestone in the regulation and regulation of the digital asset industry. The most important legislative period since. This article will sort out the key content, market impact and potential passage of the following bills.

Recently, the U.S. Congress is voting on a number of cryptocurrency-related bills. These bills can greatly improve the clarity of industry regulation. If the relevant bills are passed smoothly, they may become a milestone in the regulation and regulation of the digital asset industry. The most important legislative period since. This article will sort out the key content, market impact and potential passage of the following bills.

• HR4763 — Financial Innovation and Technology for the 21st Century Act- 21st Century Financial Innovation and Technology Act
• HR4766 — Clarity for Payment Stablecoins Act of 2023- Payment Stablecoin Clarity Act
• HR4841—Keep Your Coins Act of 2023-Save token bill
• HR1747 — Blockchain Regulatory Certainty Act-Blockchain Regulatory Certainty Act
• S.2355 — A bill to clarify the applicability of sanctions and antimoney laundering compliance obligations to United States persons in the decentralized finance technology sector and virtual currency kiosk operators, and for other purposes.（THE CRYPTO-ASSET NATIONAL SECURITY ENHANCEMENT AND ENFORCEMENT (CANSEE) ACT）-加密资产国家安全增强法案
• HR2670 — National Defense Authorization Act for Fiscal Year 2024-National Defense Authorization Act

Note: "HR" stands for House of Representatives, which means that the bill was proposed by members of the House of Representatives, and "S" stands for Senate, which means that the bill was proposed by members of the Senate.

1. US legislative process

First of all, it is necessary to have a general understanding of the US legislative process to better understand the contradictions and potential opportunities for the passage of the bill. The United States is a country with separation of powers, in which legislative power is vested in Congress; executive power is vested in the President of the United States; and judicial power is vested in the Supreme Court of the United States. Congress is composed of directly elected members of the Senate and House of Representatives, each member representing the voters in his constituency. The specific composition of the 118th Congress of the United States is as follows:

• Senate: 48 Democrats; 3 independents (joining the Democratic caucus); 49 Republicans
• House of Representatives: 212 Democrats; 222 Republicans.

Source: wikipedia Thus the ruling Democrats maintain a majority in the Senate, while the majority in the House is Republican.

According to the rules of procedure of the American Congress, the Senate and the House of Representatives, there are four types of motions, namely, Simple Resolution, Concurrent Resolution, Joint Resolution and Bill. Among them, bill is the most common and most used form of legislation. Except for the taxation bill and the Omnibus bill, which must be proposed by the House of Representatives, bills are proposed by one house, and after deliberation and approval, they are sent to the other house for deliberation and approval. After being passed by both houses and unified, they are submitted to the president to sign into national law. During this period, the following procedures are required:

1. Drafting bills

Ideas for bills can come from an industry representative body or individual citizens, and only a senator or representative can formally introduce a legislative bill. Drafters look for co-sponsors among fellow MPs to add weight to their proposals.

2. Propose a bill

During the regular session of the Congress, after the proponents fill in the main content of the bill title according to the fixed format and sign it, the members of the House of Representatives put the bill into the "bill box" to complete the bill submission process; At the meeting, with the permission of the meeting host, read the title of the motion and state the content of the motion to complete the motion submission procedure.

3. Committee deliberation

The House of Representatives will transfer the bill to a special committee for research, debate, hearing and improvement. After the bill is submitted to the committee, it enters a complex, lengthy and changeable deliberation process. The deliberation process of the committee is a process in which various forces reach a consensus on the basis of competition and compromise. After being approved by the committee, the bill will be sent to the whole house for debate and voting.

4. Deliberation by the General Assembly

There is a big difference between the House of Representatives and the Senate in the deliberation procedures of the full house assembly. The House of Representatives emphasizes "the minority obeys the majority"; the Senate emphasizes "negotiation, compromise, and cooperation" between the majority party and the minority party.

House of Representatives: For important bills that reflect the interests of the majority party, the Rules Committee can adopt "Closed Rules", that is, the bill does not accept amendments or substitutions during the deliberation process; for other bills, the Rules Committee can adopt "Open Rules" Rules (Open Rules)", allowing members to propose relevant amendments or alternatives during the deliberation process.

Senate: A bill that passes committees and goes to a vote depends on the support of 60 senators. The Senate has very few restrictions on the debate of members. As long as the rules of procedure are not violated, senators can speak freely on any topic without time restrictions. The Senate can only vote after all the members have finished speaking, thus creating a special mode of operation - Filibuster, through which senators can prevent the Senate from voting on the bill under consideration. Senators can propose amendments or alternatives in any form and with different contents to any part of the bill, which provides space and conditions for the leaders of the two parties to bargain on the bill and seek compromises.

5. The unified text of the two chambers

Before the relevant bill is submitted to the president for signature into law, the two chambers must negotiate and unify the text of the bill.

6. Signed by the President

THE PRESIDENT'S SIGNED: Approves the bill, and it becomes law.

Presidential Veto: Return it to Congress with reasons for the veto. The two chambers can accept the opinion of the president, and the bill or joint resolution can be revised before being sent to the president for signature. The veto can also be overturned by a 2/3 vote of the House of Representatives and the Senate, and the bill will become law.

Presidential inaction: If Congress is in session, the bill automatically becomes law after 10 days of no response from the President; if Congress adjourns within 10 days of submitting the bill to the President, the bill will not become law.

Recent digital currency related bills

1. The Financial Innovation and Technology for the 21st Century Act (Fit21)

sponsor

Co-authored by Republican members of the House Agriculture and Financial Services Committees, the 212-page bill was first released in early June and its co-sponsors include House Agriculture Chairman Glenn Thompson (R-Pennsylvania), Rep. State Republican) and Rep. Dusty Johnson (R-S.D), with Hill leading the inaugural subcommittee on digital assets, financial technology and inclusion, and Johnson leading the subcommittee on commodity markets, digital assets and rural development.

One might wonder why the House Agriculture Committee cares about cryptocurrencies. The reason is that one of the Committee’s responsibilities is to oversee commodities, and historically most commodities have been agricultural products such as corn, soybeans, and wheat. In 1974, the federal government created the Commodity Futures Trading Commission (CFTC) to regulate commodity futures trading, and it is still the Council of Agriculture that authorizes the CFTC and handles futures trading. In a statement, the Council of Agriculture said it is interested in all types of commodity markets, including those emerging through new technologies, such as cryptocurrencies and cryptocurrency futures trading.

Content and Impact

The bill clarifies the cryptocurrency regulatory roles of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), and gives the Commodity Futures Trading Commission (CFTC) jurisdiction over digital commodities (Digital Commodity), including exchanges related to digital commodities , Broker and Dealer. According to a bill fact sheet published by the co-sponsors, about 70% of crypto tokens are more suitable to be considered as commodities rather than securities, that is, 70% of tokens should be governed by the Commodity Futures Trading Commission (CFTC), noting that only Tokens cannot be classified as securities by virtue of an investment contract. The following is the definition of digital commodity (Digital Commodity) in the act. It can be found that the main condition for digital assets (Digital Asset) to be regarded as digital commodity (Digital Commodity) is the functionality of decentralization and associated networks.

Market participants must comply with the new and more comprehensive disclosure requirements. Intermediaries can register with the SEC or CFTC according to whether the relevant subject matter is a digital commodity (Digital Commodity). If both are involved, they need to register with both the SEC and CFTC (DUAL REGISTRATION ).

The bill refers to digital assets as "any fungible digital representation of value", thus explicitly excluding NFTs. At the same time, the bill also lists relevant "ancillary activities" (Ancillary Activities) that are not subject to this Act, which include key blockchain support and operation services and actions, such as "compiling network transactions", "providing computing work", "providing user interface", "developing, publishing, building, managing, maintaining or otherwise distributing blockchain systems", etc.

This bill represents a good first step in properly regulating the digital asset industry and is a response to the need for regulatory clarity in the digital asset space.

process

On July 27, the House Financial Services Committee passed the bill; on July 28, the House Agriculture Committee passed the bill; the legislation will then go to the House for a full vote.

The bill faces obstacles from Democrats, with many arguing that the SEC should play a larger role than the bill currently assigns. For example, California Democratic Congressman Maxine Waters once said that she did not think she should give such strong support to the CFTC; Hilary Allen, a professor at the Washington School of Law at American University, criticized the bill as a Republican attempt to curry favor with crypto exchanges, Wall Street and Silicon Valley venture capitalists. It is doubtful whether the bill will pass the Democratic-controlled Senate.

2. Clarity for Payment Stablecoins Act

sponsor

The Clarity for Payment Stablecoins Act, introduced by House Financial Services Committee Chairman Patrick McHenry, is the latest in a series of draft stablecoin legislation he has worked on since last year, The bill aims to provide a regulatory framework for stablecoins and protect consumers by establishing uniform standards for stablecoin issuance.

Main content and impact

The bill introduces capital, liquidity, and risk management requirements, requiring licensed stablecoin issuers to hold reserves to back issued stablecoins, publish monthly the composition of their reserves, and publicly disclose their redemption policies , Establish a timely redemption procedure, the reserves held cannot be pledged, re-mortgaged or reused, except for the purpose of creating liquidity to meet redemption requests. Issuers outside the United States must seek registration in order to conduct business in the country.

Although it may increase compliance costs, the bill is conducive to the further development of stablecoins and DeFi, and at the same time has positive significance for RWA. Projects surrounding assets such as fiat currency and treasury bonds will be able to be carried out legally and compliantly, providing a basis for the large-scale development of RWA. Pave the way for development. Coinbase Chief Legal Officer paulgrewal.eth stated on social media that the passage of the "Payment Stablecoin Clarity Act" provides important protections for US investors.

process

On July 28, the Financial Services Committee of the U.S. House of Representatives passed the U.S. stablecoin regulation bill "Payment Stablecoin Transparency Act" by a vote of 34 to 16. The bill also faces obstacles from Democrats. Stephen Lynch, a Massachusetts Democrat, suggested delaying the vote until September, saying Democrats would not have had enough opportunity to express their ideas. California Democrat Maxine Waters argued the bill could lead to bad license competition and said neither the Federal Reserve nor the U.S. Treasury support the bill as it stands.

3. Keep Your Coins Act of 2023

The bill aims to protect the rights of consumers to keep Bitcoin in self-custodial wallets, ensure the freedom and privacy of individual users when managing their own encrypted assets, and emphasizes giving individuals full control over their digital assets, possibly through decentralization The principles of globalization and financial autonomy have had a major impact on the cryptocurrency landscape.

On July 28, the "Save Tokens Act" was passed by the Financial Services Committee of the House of Representatives and will be submitted to the House of Representatives for voting in the future.

4. Blockchain Regulatory Certainty Act

sponsor

On March 23, 2023, members of the U.S. House of Representatives Tom Emmer and Darren Soto proposed the "Blockchain Regulatory Certainty Act" to Congress. The sponsor, House Majority Whip Tom Emmer, is considered to be the most supportive legislator for the encryption industry in the House of Representatives. He has supported the "SEC Stability Act" (SEC Stability Act) submitted by House Representative Warren Davidson, which requires the restructuring of the US SEC and the firing of its chairman Gary Gensler. On May 18th, Tom Emmer and Darren Soto also introduced the bipartisan "Securities Clarity Act" (The Securities Clarity Act), "Securities Clarity Act" has no further news.

Main content and impact

The bill aims to clarify the regulatory obligations of blockchain developers and service providers without control, and introduces a "safe harbor" clause for blockchain developers and blockchain service providers. Blockchain developers, and non-custodial service providers (including miners, validators, and wallet providers) should not be considered money transmitters and should not be treated at the same level as cryptocurrency exchanges that provide custodial services supervision. As long as these entities cannot control the digital assets held by users on their platforms, they will not be classified as remittance service providers or financial institutions requiring licensing or registration and will be exempt from specific licensing requirements.

process

On July 27, the Blockchain Regulatory Certainty Act was passed by the House Financial Services Committee.

5. THE CRYPTO-ASSET NATIONAL SECURITY ENHANCEMENT AND ENFORCEMENT (CANSEE) ACT

sponsor

Introduced July 18 by Senator Jack Reed and co-sponsored by Senators Mark Warner (D-Virginia), Mike Rounds and Mitt Romney (R-Utah), a two-part effort focused on money laundering and sanctions compliance party bill. Jack Reed named the act "THE CRYPTO-ASSET NATIONAL SECURITY ENHANCEMENT AND ENFORCEMENT (CANSEE) ACT" on his personal website.

Main content and impact

The bill aims to prevent DeFi's money laundering and evasion of sanctions and modernize the main anti-money laundering agency of the Ministry of Finance. It requires DeFi agreements to comply with the same anti-money laundering and related economic sanctions as other financial institutions. Rules, including maintaining anti-money laundering plans, Conduct due diligence on its customers and report suspicious transactions to the Financial Crimes Enforcement Network (FinCEN), among other things. The bill requires the controller of the DeFi protocol to ensure that the anti-money laundering program is effective, and if the protocol does not have an identifiable controller, the responsibility is placed on the person who invested more than $25 million in the development of the protocol. For example, if a sanctioned person (such as a Russian oligarch) uses DeFi services to evade U.S. sanctions, then the person who controls the project or invests more than $25 million in the development of the project (in the absence of a real controller) will be responsible for assisting this project. Liability for Violations.

There are currently about 30,600 encrypted currency ATMs in the United States. The bill requires encrypted asset ATM operators to comply with KYC laws to ensure that they will not become carriers of illegal activities such as money laundering. The bill will deal a blow to the development of DeFi in the United States.

process

The bill, which is the result of bipartisanship, especially because its goal is to strengthen national security, makes it more likely to win a full house vote and has not yet reached a committee vote.

6. Fiscal Year 2024 National Defense Authorization Act (NDAA)

The National Defense Authorization Act is an annual bill introduced by the U.S. Congress that redefines the U.S. military budget for the following year. The House of Representatives and the Senate introduced the National Defense Authorization Act for Fiscal Year 2024, HR 2670 and S. 2226, respectively.

On July 28, 2023, the U.S. Senate passed the National Defense Authorization Act for Fiscal Year 2024, which includes amendments to strengthen the supervision of financial institutions for cryptocurrency transactions, mixers, and "enhanced anonymity" encrypted assets. The amendment was proposed by a bipartisan group of U.S. senators including Democrat Kirsten Gillibrand of New York, Republican Cynthia Lummis of Wyoming, Elizabeth Warren of Massachusetts and Roger Marshall of Kansas.

The amendment is based on the Lummis-Gillibrand Responsible Financial Innovation Act of 2023 (S.4356 — Lummis-Gillibrand Responsible Financial Innovation Act) and the Digital Assets Anti-Money Laundering Act introduced by Warren and Marshall in 2022 It is formulated to strengthen anti-money laundering and anti-terrorism supervision of cryptocurrencies and combat anonymous transactions of cryptocurrencies. It requires the Secretary of the Treasury to develop review standards for encrypted assets to help reviewers better assess risks and ensure compliance with money laundering and sanctions laws; and the Ministry of Finance to conduct research on "combating anonymous encrypted asset transactions", especially for currency mixers. The passage of the bill will strengthen the United States' efforts to combat cryptocurrency anti-money laundering. Now the two houses need to negotiate a unified version that can pass both houses.

Regarding the "Lummis-Gillibrand Responsible Financial Innovation Act" mentioned above (S.4356 — Lummis-Gillibrand Responsible Financial Innovation Act) was sponsored by Senators Cynthia Lummis (Republican of Wyoming) and Kirsten Gillibrand (New York State Democrats), Cynthia Lummis, a crypto supporter who has been dubbed the Senate’s “Cryptocurrency Queen,” was once considered the most comprehensive and bipartisan cryptocurrency bill ever enacted in the Senate. The collapse of FTX put the proposal on hold, and there is no new action after November 2022.

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