New Draft Legislation Seeks to Define Cryptocurrencies as Securities or Commodities

Advocates of cryptocurrency have expressed their support for a new draft legislation that seeks to provide clarity on defining whether digital assets are securities or commodities. The proposed legislation, introduced by Republican lawmakers in the US House Financial Services Committee and the House Agriculture Committee, is aimed at regulating digital assets and establishing a framework that determines how they should be treated.

The bill aims to provide clarity on when digital assets would be considered securities and, therefore, regulated by the Securities and Exchange Commission (SEC). The proposed legislation also sets out how digital assets will be treated and how intermediaries can register with the SEC or Commodity Futures Trading Commission (CFTC).

Proposed Framework for Jurisdiction

The legislation aims to establish a framework that would give the CFTC jurisdiction over digital commodities while clarifying the SEC’s jurisdiction over “digital assets offered as part of an investment contract.” The legislation also creates a framework for when certain digital assets would become decentralized, thereby becoming a commodity under the CFTC, and no longer under the jurisdiction of the SEC. However, the SEC has the power to challenge this classification.

The proposed legislation seeks to provide clarity and transparency on whether digital assets are commodities or securities. Brett Quick, head of government at the Crypto Council for Innovation, expressed her support for the bill, stating that “establishing clarity and transparency on when a digital asset is a security or a commodity is critical and defining the SEC’s and CFTC’s respective roles is an important step.”

Plans for a Hearing

The House Agriculture Committee is planning to hold a hearing called “The Future of Digital Assets: Providing Clarity for Digital Asset Spot Markets” next week. Coinbase’s Chief Legal Officer, Paul Grewal, has been invited to testify at the hearing. Senior policy officials are hopeful to discuss the legislation with Rep. Maxine Waters, D-Calif., who used to chair House Financial Services.

The proposed legislation seeks to provide clarity and transparency on whether digital assets are securities or commodities. The bill aims to establish a framework that determines how digital assets should be treated and how intermediaries can register with the SEC or CFTC. The proposed legislation is expected to be discussed further at the upcoming hearing.