A bill to create a regulatory framework for digital assets has been introduced by Republican members of the Agriculture and Financial Services Committees of the United States House, the result of several months of joint effort by the two committees.
The 212-page bill — called the Financial Innovation and Technology for the 21st Century Act — was introduced on July 20. According to an accompanying explainer, it’s intended to address regulatory gaps by creating a framework for the “specific risks of different digital asset-related activities.”
The bill gives the Commodity Futures Trading Commission (CFTC) jurisdiction over digital commodities, clarifies the jurisdiction of the Securities and Exchange Commission (SEC) and creates a process for digital assets originally deemed securities to be sold as commodities.
The bill also sets conditions for a digital asset to be considered a commodity, with decentralization being the main requirement. Digital asset commodities could be sold on SEC-registered digital asset trading systems. Market participants are subject to new and more comprehensive disclosure requirements and could have registration with both agencies.
Introducing the Financial Innovation and Technology for the 21st Century Act. This bill establishes a regulatory framework for digital assets, protects consumers, fosters innovation, and positions America as a leader in finance and technology. #crypto https://t.co/0ihzY3MP0k
— House Committee on Agriculture (@HouseAgGOP) July 20, 2023
The agencies would also be required to work with foreign regulators to create consistent regulatory standards. The Government Accountability Office would be required to complete a study on nonfungible tokens (NFTs) and how they fit into traditional marketplaces.
Reps. French Hill and Dusty Johnson, who are among the cosponsors of the bill, sent a letter to SEC chair Gary Gensler a day before the introduction of the bill criticizing the agency’s so-called “regulation by enforcement” of the crypto industry.
SEC policy was also highlighted in the bill’s introductory materials. One of the documents stated:
“The SEC’s existing regulatory regime is not designed to accommodate the registration and regulation of digital assets. The SEC has failed to provide the clarity these entities need to operate.”
The other cosponsors of the bill were Glenn Thompson, Tom Emmer and Warren Davidson. The two House committees began working together on a digital assets bill earlier this year and held more than one joint meeting in preparation for it.
Last week, Sens. Cynthia Lummis and Kirsten Gillibrand introduced a new version of their bipartisan Responsible Financial Innovation Act (RFIA), which this bill will compete with.