Crypto US Hands On A 70-Page Draft Law

The crypto industry is about to see the emergence of a regulatory bill implemented by US senators and expected to be released today.

Draft US Crypto Law

The highly-anticipated event of the community this week is the announcement of a draft law governing cryptocurrency.

The US has continuously made legal moves targeting the crypto sector in recent years, as demonstrated by the stablecoin report of the financial adviser’s group to President Biden in November 2021 and the “historic” executive order issued by the US government. Biden himself signed in February 2022.

By early June, US officials had been charged with “insider dealing” with a former senior manager of the NFT OpenSea exchange. This move is expected to set a precedent for similar cases involving the NFT exchange Cryptocurrency in the future.

The latest, a “comprehensive” crypto regulation bill, is expected to be published today (June 7). The account will be penned by Senator Cynthia Lummis, an official who has long been vocal in favor of cryptocurrencies and admitted to investing in Bitcoin. Ms. Lummis has hinted about implementing the bill from the end of 2021.

 On June 7, the community passed a “leaked” version of this 70-page bill. Summarizing some of the key highlights from the draft bill, based on Adam Cochran’s series of Twitter posts, the draft includes regulations for each sector of the crypto industry. Specifically:

Stablecoin exchanges/providers:

– Requires all exchanges and stablecoin issuers to register to operate, but it is not clear how to apply to DeFi projects;

– The law will impose a lot of regulations on the management of the exchange, which will most likely improve the listing quality and prohibit the exchange from taking advantage of users;

– Trading platforms will incur additional fees/taxes to the authorities, which will likely push up transaction fees;

– All projects that trade 1 or more assets are considered digital asset trading platforms, possibly including DEX/AMMs;

– Granting the right to issue stablecoins with depositing financial institutions.

The essence of crypto assets:

– Classify the majority of crypto assets as “assets” under the CFTC regulation, not “security” under the jurisdiction of the SEC;

– If a crypto asset is accompanied by elements of debt, equity shares, dividends, dividends, or the like, it will not be considered a “digital asset”, but the law does not said it would be classified as a “security”.

Regulations on crypto project management:

– Imposing information disclosure requirements, making it nearly impossible to register crypto projects and still operate anonymously;

– Require DAOs operating in the US to register as a legal entity; otherwise, they will still be considered taxable subjects;

– In case of bankruptcy, the assets deposited by the users into the project will be returned but not included in the liquidation of assets;

– Requires users of crypto platforms to agree to a “Terms of Service” for risk awareness based on the protocol version. When updating the source code (soft/hard fork), projects must include new terms.

General legal:

– Paving the way for other regulators to investigate and recommend more regulation for the crypto space;

– Impose compliance regulations and fines for violations;

– Unify the regulation of money movement on a federal scale;

– Increased information sharing between state and federal officials.

Mr. Cochran commented that the bill includes several positive points that can bring the crypto industry into the legal framework, but some regulations are considered “overkill”. The new laws, when applied, will govern the crypto sector with the same rigor as “traditional finance”, which will be good in the long term but will be extremely difficult in the short time for the “99% projects” who will be forced to make dizzying changes to comply with the law. It is worth noting that the draft law does not explicitly mention the NFT.

However, this is only a draft. After being published, it will have to get comments, propose further amendments, and then submit it to the US Senate and House of Representatives for discussion and approval before becoming a formal law. This process will take a lot of time.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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