From: allin
A new framework for cryptocurrency regulation is being developed with the goal of bringing crypto out of the shadows, offshore ICOs, and into legitimacy [00:34:06]. The plan aims to support the responsible use and growth of digital assets and blockchains across every sector of the economy [00:34:37].
Trump’s Mandate
President Trump’s week one executive order on crypto spells out the administration’s principal stance [00:34:28]. The objective is to make the United States a leader in the responsible development of digital assets.
Legislative Plan and Key Committees
A legislative plan for cryptocurrency has been announced, involving key committees from both the House and Senate [00:34:58]. For the first time, the chairmen of the four primary committees governing crypto have united to support legislation [00:35:56]. The goal is to pass this legislation within the next six months [00:36:17].
The committees involved include:
- Tim Scott, Chairman of the Senate Banking Committee [00:35:01]
- French Hill, Chairman of the House Financial Services Committee [00:35:07]
- John Boseman, Chairman of the Senate Agriculture Committee [00:35:15]
- GT Thompson, Chairman of the House Agriculture Committee [00:35:23]
The involvement of the Agriculture Committee stems from its supervision of the CFTC (Commodities Futures Trading Commission), which regulates commodities, including Bitcoin [00:35:31].
Defining Digital Assets (Market Structure)
A critical aspect of the new framework is establishing “market structure,” which involves clear definitions for various types of digital assets [00:37:22]. Digital assets can be classified as:
- Cryptocurrencies: Actual currencies [00:37:31].
- Crypto Securities: Digital assets that function as securities [00:37:35].
- Commodities: Assets like Bitcoin, which is currently regulated as a commodity [00:37:37].
- Collectibles: Non-fungible tokens (NFTs) [00:37:45].
Clarity around these definitions is crucial for founders to understand and comply with the rules [00:37:50]. This framework will also address how a crypto project might evolve from being a security to becoming a decentralized protocol or commodity [00:38:01]. French Hill’s “fit21” bill, which previously passed the House with bipartisan support (71 Democratic votes), serves as a precedent for this market structure legislation [00:38:17].
Focus on Stable Coins
Legislation concerning stable coins is expected to move forward quickly, even before broader market structure bills [00:41:09]. Senator Hagerty has released a stable coin bill, with counterparts in the House [00:41:02]. This focus is seen as a “layup” and an early win that could reinforce dollar supremacy if stable coins are tied to the dollar [00:41:47].
Consumer Protection and Onshore Innovation
A primary goal of the framework is to protect consumers by bringing cryptocurrency activities onshore within the United States [00:42:15]. When activity is driven offshore, it becomes difficult for regulators to supervise, making it harder to distinguish between good and bad actors [00:42:21]. The fact that FTX, one of the biggest crypto frauds, was based in the Bahamas, highlights this issue [00:42:37]. The framework will include disclosure requirements for creating crypto projects [00:43:12].
SEC’s Role
Previously, the SEC, under Gary Gensler, was seen as a blocker to crypto innovation, stating that existing rules should simply be followed [00:42:22]. However, the SEC’s doors were not truly open, as crypto companies seeking clarity often faced enforcement actions instead [00:43:44]. The SEC has since created a new task force under Commissioner Hester Peirce to define a better regime for crypto projects [00:43:20].
Challenges and Opposition
While there is a good chance for bipartisan support, particularly for market structure legislation, some forces in Washington remain hostile to crypto [00:39:51]. Despite this, proponents believe that with a clear framework, legislation can pass with significant Democratic and Republican support [00:39:44].