New draft crypto bill is believed to curb the impact of big crypto companies

According to Paradigm executives, the new “Draft Discussion on Digital Asset Market Structure” proposed by House Republicans on May 5 may work to reduce the dominance of large cryptocurrency companies and promote wider market participation.

The draft discussion, chaired by House Agriculture and Financial Services Committee chairperson Glenn Thompson and French Hill, is “a “meaningful, though meaningful, rewrite” of financial innovation and technology in the 21st Century Regulations (FIT21).

One of the main changes to FIT21 is that the draft defines affiliates as more than 1% of the digital goods issued by the project (down from 5% in the FIT21 bill), and the massacre could curb the impact of large cryptocurrency companies and lead to more participation in the cryptocurrency market.

“This is forward-looking in the whole bill. It is often criticized by large companies that have too many cryptocurrencies to be dominated by. The bill clearly shows that the proposed regulatory regime will drive this fact and strongly encourage smaller-D “democratization” of the space.”

The draft also defines a “mature blockchain system” as a type of digital goods that are associated with them are not “commonly controlled” by any individual or group.

Slaughter noted that the SEC would be the primary authority over crypto-network activities until they become sufficiently dispersed.

The draft also clarifies that the decentralized financial transaction agreement is those who enable users to conduct financial transactions with “self-guidance.” Agreements that comply with this standard are exempt from registration as a digital commodity broker or dealer.

The draft also calls digital goods “investment contract assets” to distinguish their treatment from stocks and other traditional assets under the Howey test.

According to Slaughter’s analysis, securities laws will not be triggered unless the secondary sale of tokens also transfers ownership or profits to the underlying business.

In another statement on May 5, the committee members said the crypto company will also raise funds under the supervision of the SEC, while also having a “clear process” to register its digital goods in the Commodity Futures Trading Commission.

Joint rulemaking, procedures or guidelines related to downgrade of crypto assets must be determined by the CFTC and the SEC if registered assets no longer comply with the rules set by the regulator.

A “clear opportunity” to advance crypto innovation, once and for all rules

House committee members said the crypto committee was a “clear opportunity” to advance innovation in the U.S., most notably by modernizing U.S. financial infrastructure and enhancing the dominance of the U.S. dollar, according to the need for a comprehensive crypto regulatory framework.

Republicans criticized the previous Biden administration and Gary Geisler-led SEC for adopting item-by-item regulations rather than creating clear rules for market participants.

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House committee members said that many cryptocurrency companies are trapped in “legal barriers” due to unclear rules, pushing some industry players to certain industry players overseas, where more obvious rules exist.

“The United States needs to be a force for digital asset investment and innovation. For this to happen, we need a common sense regulatory system,” said Dusty Johnson, chairman of the Subcommittee on Commodity Markets, Digital Assets and Rural Development.

“This bill will ultimately provide a clear regulatory regime on cryptocurrencies that many people call for,” Slaughter added.

Republicans are already facing obstacles in discussing draft

A Democratic employee told Cointelegraph that House Financial Services Committee ranking member Maxine Waters plans to block Republican-led events on May 6 to discuss digital assets.

The hearing “The Future of American Innovation and Digital Assets” is expected to discuss the new crypto market draft marketed by Thompson, Hill and other committee members.

However, according to the unnamed Democratic staff, the current rules require all members of the House Financial Services Committee to reach consensus on such hearings.

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