After what seems like years of waiting, cryptoasset regulation that could change the face of the sector forever now appears to be in play
The US could beat the European Union to the punch and put in place a full framework for dealing with digital assets.
This is the Digital Commodity Exchange Act 2020.
Who introduced the Bill?
Texas Republican Congressman Mike Conaway introduced the Bill on 24 September 2020.
As a certified public accountant Conaway has held a number of positions in the private sector, including as a tax manager at PriceWaterHouseCooper, chief financial officer for three oil and gas companies, and senior vice president at Texas Commerce Bank and at United Bank. As such he has strong experience of the fiendishly complex regulatory structures that underpin the financial system.
What’s in the Bill?
The DCEA is intended to fill in the regulatory gaps that exist between the two main market regulators who protect US investors: the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
Firstly, it creates a framework to regulate all trading venues that list digital commodities for public trading, including Bitcoin, Ethereum, XRP and crucially, all of their forks as well.
Secondly, it gives the CFTC authority to become the registration house and regulator for the entire sector at large.
Thirdly, it attempts to simplify the spot (daily) market for digital assets by providing trading venues an alternative to state-by-state money transmitter regulations, like New York’s popular BitLicense.
It relies on state and federal banking regulators to license and supervise custodians. While this final point could have made for another set of drawn-out arguments and industry headaches, recent regulatory action actually, for once, is moving in the right direction.
In September 2020 The Conference of State Bank Supervisors unveiled a new regime for money services businesses, with 48 state regulators agreeing a single set of supervisory rules. As Reuters reported: “The new streamlined regime applies to 78 large payment and cryptocurrency firms, which combined move over $1 trillion annually [reducing compliance costs and making] it easier for companies to operate across multiple states.”
What could it mean?
Cryptoexchanges will want a seat at the table here. An exacting regulatory framework will be costly, but not as expensive and troubling as not having one in the first place. Certainty, laid down in black and white, is better than dealing with uncertainty.
Expect lobbyists to attach themselves to any US politician with the slightest sway on CFTC policy, and for money to pour into the space.
For years Copper has been writing about the piecemeal regulatory updates that have hampered the growth of the US cryptoasset industry.
Finally, we are seeing a light at the end of the tunnel. And for once, it’s not an oncoming train.