A discussion draft of the much-talked-about market structure bill that aims to establish a regulatory regime for digital assets in the U.S was published earlier this Monday.
After FIT21 faced some criticism for dramatically curbing the regulatory powers of the Securities and Exchange Commission (SEC), the new bill aims to clearly delineate the responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC). The former would deal with cryptocurrency offerings that are deemed to be investment contracts, while the latter would regulate commodities.
“Overall, this bill again would make the CFTC the dominant crypto regulator, but still gives the SEC jurisdiction until a network establishes decentralization,” Paradigm’s Justin Slaughter said on X.
Notably, the bill establishes a clear decentralized test. In order for a project to qualify as decentralized, a single party is not supposed to have unilateral control. Holders controlling more than 10% of the supply are supposed to be disclosed while the project remains centralized in order to ensure transparency.
A blockchain is deemed “mature” if it has fundamental value and is substantially developed, functional, open, impartial, rules-based, and is not centrally controlled or owned (less than one-fifth of the supply).
The draft version of the bill also removes requirements linked to networth thresholds, meaning that the market would be open to more ordinary investors.
When it comes to decentralized finance (DeFi), some protocols can be exempt from regulation if they are non-custodial and do not exercise discretion.
“There’s no understating the urgency and bipartisan partnership with which Congress is moving to unlock crypto innovation in the United States,” Faryar Shirzad, chief policy officer at Coinbase, said on X in response to the announcement.
It is also worth noting that the bill defines stablecoins without classifying them as security.
As reported by U.Today, major stablecoin legislation has hit a major roadblock in the Senate, with multiple pro-crypto Democrats weighing withdraw their support.
Notably, Senate Minority Leader Chuck Schumer has concerns about Tether, the flagship stablecoin issuer, according to a recent report.
