US congressional committee passes bipartisan bill to develop a regulatory framework; crypto players finally see light

As the key congressional committee on July 26, advanced a bipartisan bill which aims to develop a regulatory framework for cryptocurrencies, as per a Retuers report, this finally seems to have allowed the cryptocurrency industry breathe a sigh of relief. In the last one year, the industry has had its share of controversy including the famous collapse of FTX. Industry experts believe that the bill might be able to identify crypto assets as securities or commodities and expand the Commodity Futures Trading Commission’s (CFTC) oversight while looking at the Securities and Exchange Commission’s (SEC) perceived overreach. “This will also support Web3.0 projects to create a decentralised ecosystem, as they will be held accountable based on the bill’s requirements. Furthermore, this could facilitate the Commodities and Futures Trading Commission to play an active role in the Web3.0 industry, countering the perception of monopolistic control by the SEC,” Rajagopal Menon, vice president, WazirX, a cryptocurrency platform, told FE Blockchain. 

According to representative Patrick McHenry, the Republican chair of the House Financial Services Committee, at the markup other jurisdictions such the UK, the European Union (EU), Singapore and Australia have moved forward with clear regulatory frameworks for digital assets. It is believed that the United States is at risk of falling behind. The latest bill is expected to have clarified that tokens will not be classified as securities unless they are able to fulfil specific criteria. The bill also seeks to address the Commodity Futures Trading Commission’s (CFTC) role in the crypto industry, while also giving clarity on SEC’s oversight. 

Interestingly, over the past 24 hours, there has been a noticeable change in patterns in the dynamic world of cryptocurrencies. Experts believe the total cryptocurrency market volume has shrunk to $25.71 billion, experiencing a decline of about 17.43% (28 July, 2023 11:00 am IST) eventually leading the market players to pause for thought. Some democrats, including Maxine Waters, representative, top Democrat, Financial Services Committee, are believed to have fiercely opposed the bill. “The industry hopes that bipartisan support will result in well-crafted regulations that strike a balance between fostering innovation and safeguarding investors. Current developments in the US can also pave the way for other nations to follow and come up with favourable regulations which can enable the crypto industry to thrive,” Rahul Pagidipati, CEO, ZebPay, a crypto-asset exchange, explained. 

From what it is understood, cryptocurrency platforms started out in a regulatory blank area, but the SEC has asserted its authority over the industry, arguing that most cryptocurrencies are securities and subject to investor protection rules. User cases such as the issuing lawsuit against Coinbase and Binance, crypto exchanges, for failing to register some crypto tokens by the SEC, are looked at as steps towards strengthing crypto assets regulations. 

“The classification of cryptocurrencies as securities or commodities represents a progressive step, bolstering Commodity Futures Trading Commission (CFTC) oversight and addressing SEC concerns. Simultaneously, a bill to set stablecoin requirements under the Federal Reserve’s jurisdiction is being discussed, potentially offering long-awaited regulatory clarity for the industry, balancing innovation and investor protection,” Edul Patel, CEO, co-founder, Mudrex, a crypto-investing platform, concluded.

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