Congressman Patrick McHenry, Republican of North Carolina and ranking member of the House Financial Services Committee, speaks during a hearing in Washington, DC
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Republican lawmakers released a bill on Friday that would give crypto assets and exchanges a clearer regulatory framework, allowing digital assets to be traded on more conventional trading platforms and introducing a separation of powers between the two largest US financial regulators.
The debate bill was co-authored by Reps. Patrick McHenry, R-N.C., and Glenn Thompson, R-Pa., and would give the Commodity Futures Trading Commission express authority over the spot market in crypto commodities under existing law.
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The Securities and Exchange Commission will regulate digital asset securities.
The bill would “prohibit the SEC” from preventing an alternative trading system, or ATS, from listing crypto securities and require the SEC to “modify its rules to allow broker-dealers to hold digital assets,” according to a draft of summary.
The bill offers a clearer way for the registered offering and sale of digital assets. The SEC has filed several enforcement actions against US crypto entities, including Gemini, Genesis and Kraken, arguing that the companies engaged in unregistered securities offerings and sales.
A key exemption for so-called DeFi assets, or decentralized financial assets, would allow SEC-certified assets to be exempt from registration as securities.
Crypto exchanges are calling for regulatory clarity in the wake of expansive enforcement actions that have left companies and developers scrambling to move operations outside of US crypto exchanges Coinbase and Gemini announced offshore exchange operations.
Coinbase is also embroiled in a bitter legal battle with the SEC over the same issues that apparently sparked the McHenry-Thompson bill. The crypto exchange received a Wells notice, warning of impending enforcement action, from the SEC earlier this year.
The bill is likely to be reshaped and modified in the coming weeks and months, but it represents a powerful vote of support from two influential members of the Republican Party.