‘Historic week’ as stablecoin, self-custody bills advance to House floor

July 28, 2023 Coin Telegraph

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The bills aim to create a regulatory framework for payment stablecoins and enshrine rights for crypto users to self-custody digital assets.

The House Financial Services Committee has advanced another two landmark crypto bills previously under consideration — with one aiming to better regulate stablecoin issuers and another seen as positive for crypto self-custody in the United States.

On July 28 the Committee said the Clarity for Payment Stablecoins Act and the Keep Your Coins Act were passed alongside five other finance-related bills.

Respectively the bills aim to provide regulations on the issuance of payment stablecoins and ensure crypto users are permitted to maintain custody of their assets in self-custodial wallets.

Coinbase chief policy officer Faryar Shirzad said in response to the bills passing that it's a "historic week" for crypto regulation.

Yet more congratulations to @PatrickMcHenry for getting the Clarity for Payment Stablecoins Act across the line with bipartisan support. It’s been a historic week, and a big step forward for consumer protection. https://t.co/7bRgAotAD6
— Faryar Shirzad (@faryarshirzad) July 28, 2023

On July 26, the Committee passed the Financial Innovation and Technology (FIT) for the 21st Century Act and the Blockchain Regulatory Certainty Act.

The bills respectively establish when crypto firms have to register with regulators and set guidelines for projects such as miners and decentralized finance (DeFi) platforms.

On July 27, the FIT for the 21st Century Act also passed the House Agriculture Committee.

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July 27, 2023 The Daily Hodl

US crypto’s future could fall on these 4 digital asset bills

July 25, 2023 Coin Telegraph

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The crypto bills could hand power to the purportedly more crypto-friendly CFTC and better define the SEC’s jurisdiction.

Since 2022, there have been at least 50 digital asset bills reportedly introduced to Congress, aiming to govern everything from stablecoins to the jurisdictions of United States regulators.

However, at least four of them are seen as potentially having a major impact on the industry (if passed) — given the attention from lawmakers and the crypto industry alike.

Financial Innovation and Technology for the 21st Century Act

This bill introduced on July 20, aims to create a solid process for determining if a digital asset is a commodity or security and would clarify the jurisdictions of regulators.

Introduced by Republican members of the Agriculture and Financial Services Committees of the United States House, the bill would give the Commodity Futures Trading Commission (CFTC) power over digital commodities and clarity on the Securities and Exchange Commission’s (SEC) jurisdiction.

Introducing the Financial Innovation and Technology for the 21st Century Act. This bill establishes a regulatory framework for digital assets, protects consumers, fosters innovation, and positions America as a leader in finance and technology. #crypto https://t.co/0ihzY3MP0k
— House Committee on Agriculture (@HouseAgGOP) July 20, 2023

A process for crypto assets that have been labeled securities would also be given a path to be re-labeled as commodities — which could see some projects revived after being effectively shut down due to past legal decisions.

Responsible Financial Innovation Act (RFIA)

A bill with similar goals — known as the Lummis-Gillibrand bill or the RFIA — aims to clarify the SEC and CFTC’s roles in crypto regulation. It also aims to give greater consumer protection by providing laws “to prevent another FTX-style event from occurring,” according to the bills fact sheet.

The crypto asset industry is here to stay.

Today, @SenGillibrand and I are reintroducing landmark legislation to create a federal regulatory framework that allows crypto businesses and investors to prosper here in America while protecting consumers from bad actors. pic.twitter.com/z2pr0evWt2
— Senator Cynthia Lummis (@SenLummis) July 12, 2023

Digital asset tax treatment clarity is also covered and the Federal Reserve would be ordered to process bank applications for master accounts from crypto firms “on an equitable basis.”

It would also see depository institutions be the only ones allowed to issue stablecoins, would make room for decentralized autonomous organizations (DAOs) in the tax code and commission an advisory committee along with a slew of regular reports on the industry.

Digital Asset Market Structure Bill (DAMS)

Introduced on June 1, DAMS is another bill aiming to define the crypto-related roles of the SEC and CFTC and set a framework for the regulators to make determinations on if certain cryptocurrencies are securities or commodities.

The bill is getting some attention, on June 26 Representative Maxine Waters sent letters to Treasury Secretary Janet Yellen and SEC chair Gary Gensler asking them to weigh in on the bill.

#RELEASE: Ranking Member @RepMaxineWaters Calls on @USTreasury, @SECGov to Share Analysis on Republican Digital Assets Market Structure Bill | https://t.co/lloLm7Lho6 pic.twitter.com/qbPNMSRl5v
— U.S. House Committee on Financial Services (@FSCDems) June 26, 2023

Under the proposed bill, before a certain crypto token is given commodity status, it would have to undergo certification with the SEC to prove its adequately decentralized.

Crypto exchanges would be able to register with the SEC as an alternative trading system (ATS) and the regulator wouldn’t be able to deny registration due to a platform trading digital assets.

The crypto firm Prometheum is an SEC-registered ATS and can offer trading, clearing, settlement and custody of digital assets, although it's currently unclear what assets the SEC permits.

DAMS would clarify ATS rules and allow for digital commodities and stablecoins to be traded on ATS platforms and the SEC would be required to allow broker-dealers to custody cryptocurrencies if they meet requirements.

Digital Commodity Exchange Act (DCEA)

First introduced in September 2020, an updated version of the DCEA was last re-introduced in April 2022 adding that stablecoin providers could register as a “fixed-value digital commodity operator” inclusive of recording and reporting requirements.

The DCEA hands the CFTC the power to register and regulate spot exchanges which are brought under the same rules as other commodity exchanges.

1/ We’re proud to support the re-introduction of the Digital Commodity Exchange Act (DCEA). There is a growing consensus in Washington that federal oversight of digital asset spot markets is needed, and we believe that the DCEA sets forward an intelligent framework... https://t.co/U0RMMOKBe9
— Blockchain Association (@BlockchainAssn) April 28, 2022

Cryptocurrencies that are not considered securities are labelled digital commodities under the CFTC’s purview and the SEC would police crypto securities offerings.

Crypto project developers could also voluntarily register with the CFTC for submitting disclosures required to publicly trade and list their asset on an exchange.

Other bills

Many more crypto bills are floating through Congress with various success. Stablecoin regulatory proposals have come through the Stablecoin TRUST Act and the Stablecoin Innovation and Protection Act.

The descriptively titled Crypto Consumer Investor Protection Act and the Crypto Exchange Disclosure Act were introduced in December 2022 but haven’t seen much movement since.

The Digital Asset Anti-Money Laundering Act was also introduced in Decemeber by Senators Elizabeth Warren and Roger Marshall would regulate crypto ATMs and ban financial firms from using crypto mixers. Warren vowed its reintroduction in February but that action is yet to happen.

Opinion: GOP crypto maxis almost as bad as Dems’ ‘anti-crypto army’

North Carolina House passes bill to commission study on holding Bitcoin

June 29, 2023 Coin Telegraph

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The study would examine the possible impact of holding crypto and how the state would custody digital currency.

A bill that would see North Carolina’s Department of State Treasurer study the feasibility and benefits of the state holding Bitcoin (BTC) has passed the lower house of the General Assembly.

On June 28, the North Carolina House of Representatives passed the bill which would commission a $50,000 study to examine “acquiring, securely storing, insuring, and liquidating” both gold bullion and “virtual currency [...] such as Bitcoin.”

The study would investigate what impact gold and cryptocurrency holdings would have if North Carolina held part of its funds in crypto and gold.

Specifically, it would research if such holdings would hedge against inflation and “systemic credit risks,” and if gold and crypto could reduce volatility, increasing the state’s portfolio returns.

Another #Bipartisan Victory in NC w/ passage of HB721 | #Bitcoin/#DigitalAssets/Custody Study Bill

-Passed 75-38
-GOP + Dems Came Together
-Directs/Funds @NCTreasurer to Study Benefits of #BTC + #Custody
-Led by @NC_Blockchain + @SoundMoneyDef

https://t.co/0veKPZlbVJ pic.twitter.com/nNYUbfmJd1
— Dan Spuller (@DanSpuller) June 28, 2023

The bill mulls potentially creating a state-administered depository for crypto that would see North Carolina as the custodian of its digital asset holdings.

The study would, however, examine the costs and benefits of using a “privately managed depository or another state’s depository.”

The 120-member House passed the bill, with 73 voting in favor, 40 against and seven absent.

The bill must pass the Senate before it’s either signed into law or vetoed by Governor Roy Cooper.

On May 3, North Carolina’s House unanimously passed a bill that would prohibit payments to the state using a central bank digital currency (CBDC).

The bill stipulated the United States Federal Reserve would also be barred from using North Carolina to test any future pilot CBDC.

The day before, on May 2, a one-year moratorium on crypto mining was passed by the Board of Commissioners for Buncombe County in North Carolina.

Opinion: GOP crypto maxis almost as bad as Dems’ ‘anti-crypto army’

Texas lawmakers propose a gold-backed state digital currency

April 9, 2023 Coin Telegraph

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The bills state that the trustee must hold a sufficient amount of gold in reserve for all units of digital currency that have been issued and are still in circulation.

Two Texas lawmakers have introduced identical bills for creating a state-based digital currency backed by gold, a move that comes despite objections from several United States lawmakers against introducing a central bank digital currency (CBDC).

Senator Bryan Hughes introduced Senate Bill 2334 on March 10, with Representative Mark Dorazio introducing House Bill 4903 on the same day, stating that a fractional equivalent amount of physical gold would back the proposed digital currency.

“Each unit of the digital currency issued represents a particular fraction of a troy ounce of gold held in trust,” the bills stated.

*Text of one of the bills. Source: capitol.texas.gov*

The bill explains that once a person purchases a certain amount of digital currency, the comptroller would use that money received to buy an equivalent amount of gold.

The purchaser would then receive digital currency equal to the amount of gold that the comptroller purchases with the money received from the purchaser.

The value of a unit of digital currency must be equal to the value of the appropriate fraction of a troy ounce of gold at the time of the transaction.

“The trustee shall maintain enough gold to provide for the redemption in gold of all units of the digital currency that have been issued and are not yet redeemed for money or gold,” the bill stated.

It was added that a fee might be established “at any rate necessary” to cover the costs of administering this chapter.

Although neither of the bills has been passed or presented for a vote, both state that this act will take “effect September 1, 2023.”

Several United States lawmakers have recently argued against the U.S. introducing a CBDC.

Florida Governor Ron DeSantis stated in a March 20 press conference that CBDCs would grant “more power” to the government, adding that it provides the government “with a direct view of all consumer activities.”

Meanwhile, on March 21, Republican Senator Ted Cruz introduced a bill to block the Fed from launching a “direct-to-consumer” CBDC, stating that it’s “more important than ever” to ensure U.S. policy on digital currencies protects “financial privacy, maintains the dollar’s dominance and cultivates innovation.”

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