The U.S. House of Representatives is gearing up to vote on a major crypto bill that aims to clarify how digital assets are regulated.
The bipartisan “Financial Innovation and Technology for the 21st Century Act” would empower the Commodity Futures Trading Commission (CFTC) to regulate crypto assets as commodities if the blockchain they run on is sufficiently decentralized.
The bill says decentralized blockchains can’t be controlled unilaterally by any one person. The potential legislation also states that no issuer or affiliated person can control 20% or more of the digital assets or the voting power of a decentralized chain.
Digital assets associated with blockchains that aren’t decentralized would be regulated by the Securities and Exchange Commission (SEC) as securities.
Eight Republicans and three Democrats have sponsored the bill, which is widely expected to go to a vote this week.
The Blockchain Association, a crypto lobbying group, has expressed support for the potential legislation, and a16z Crypto, the digital asset investment arm of venture capital giant Andreessen Horowitz, says the act would “give blockchain projects a pathway to safely and effectively launch” in the United States.
House Democratic leaders don’t plan to whip against the bill but have expressed their opposition to the potential legislation, according to a report from Politico journalist Eleanor Mueller.
In an email sent to Democratic House members, the party leadership argues that the bill “undermines decades of legal precedent and case law, thereby creating uncertainty in our traditional securities market.”
“The bill also provides a safe harbor in which entities can file an “intent to register” if they meet certain requirements, effectively shielding them from SEC rules and regulations until SEC and CFTC finalize their rules, which weakens investor protections and opens the door to fraud and market manipulation.”
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