U.S. Reps. Glenn “GT” Thompson (R-PA), French Hill (R-AR), and Dusty Johnson (R-SD) on July 20 introduced legislation that would establish a digital asset market structure framework appropriate for the unique characteristics of digital assets, providing clear rules of the road for market participants, as well as protect investors and consumers.
The 212-page Financial Innovation and Technology for the 21st Century Act, H.R. 4763, which Rep. Thompson sponsored alongside four original cosponsors, including Reps. Hill and Johnson, as well as U.S. Rep. Tom Emmer (R-MN), would provide a regulation system for digital assets by the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
Introduction of H.R. 4763 “marks a significant milestone in the House Committees on Agriculture and Financial Services efforts to establish a much-needed regulatory framework that protects consumers and investors and fosters American leadership in the digital asset space,” said Rep. Thompson, chairman of the U.S. House Agriculture Committee. “Over the past several months, our teams solicited extensive feedback from stakeholder and market participants, and worked diligently to produce a legislative product that aims to close existing authority gaps, ensuring U.S. leadership in financial and technological innovation.”
If enacted, H.R. 4763 would provide for joint rulemakings between the SEC and the CFTC, including joint rulemakings related to defining key terms in the act, the oversight of dually registered exchanges, and the oversight of mixed digital asset transactions. The bill also would prohibit the CFTC and SEC from making any rule limiting the self-custody by an individual, according to a summary provided by the lawmakers.
“After listening to members on both sides of the aisle, the Biden administration, and stakeholders, the House Committees on Financial Services and Agriculture are introducing landmark legislation today to establish a functional regulatory framework that will protect consumers and keep innovation in the United States,” said Rep. Hill, chairman of the U.S. House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion. “This legislation would not only have prevented FTX from stealing billions of customer funds, but also establishes robust consumer protections and clear rules of the road for market participants.”
Among numerous provisions, H.R. 4763 also would authorize exempted transactions in digital assets and set requirements to transact in certain digital assets; would establish anti-fraud authority over permitted payment stablecoins, require registration of digital asset trading systems, and set requirements for digital asset trading systems; and authorize commission jurisdiction over digital commodity transactions and require futures commission merchants to use qualified digital commodity custodians, according to the bill’s text.
“The digital asset space is muddled with regulatory uncertainty, lack of authority, and a lacking framework for core operating principles,” said Rep. Johnson, chairman of the House Agriculture Subcommittee on Commodity Markets, Digital Assets, and Rural Development. “The crypto industry wants clarity and our collaborative bill gives both the CFTC and SEC a seat at the table.
“Our bill establishes clear principles to ensure financial security and certainty as digital asset developers continue to innovate,” Rep. Johnson added.
The measure is under consideration in both the House Agriculture and Financial Services committees.