- Republican US Congressman Paul Gosar has presented a draft bill entitled “Crypto-Currency Act of 2020” to the House of Representatives.
- The bill divides cryptocurrencies into three categories and makes them subject to a different US federal authority.
For some time now, companies in the crypto sector in the USA have been calling for clear regulation by legal provisions at federal level. So far, crypto companies have had to struggle with various regulations at state level, or in some cases there is a complete lack of regulatory clarity. For example, it has been questionable for over two years whether Ripple’s XRP token is a security.
The Republican US congressman Paul Gosar intends to remove this uncertainty and has introduced a draft bill entitled “Crypto-Currency Act of 2020” in the House of Representatives. As Forbes reports, the bill clarifies the classification of crypto-currencies into different categories and derives the responsibility of the US federal authorities from this.
The bill divides crypto-currencies into “crypto commodities”, “crypto-currencies” and “crypto-securities”. While the Commodity Futures Trading Commission (CTFC) is to be responsible for “crypto-commodities”, the draft envisages the Securities and Exchange Commission (SEC) for crypto-securities and the Financial Crimes Enforcement Network (FinCEN) for crypto-currencies.
The bill also proposes that the Secretary of the Treasury, through the FinCEN, will issue rules that will allow, for each crypto-currency, the tracing of transactions by persons who carry out such transactions in a manner similar to that required by financial institutions in respect of foreign exchange transactions. In addition, all authorities shall be required to inform the public of all federal licenses and registrations that are required to create or trade in such assets.
The draft defines the term “crypto-currency”
The draft law also contains the definitions for the three categories of digital assets. According to these definitions, a crypto-commodity is described as an economic good or service that has full or substantial fungibility,the markets treat with no regard for who produced the goods or services, and rests on a blockchain or decentralized cryptographic ledger.
A crypto-currency is defined by the draft law as the “representation of a US currency” or a “synthetic derivative based on a blockchain or a decentralized cryptographic ledger”. These include, in particular, stablecoins (“reserve-backed digital assets that are fully collateralized in a correspondent banking account”) and synthetic derivatives that are secured by other crypto-currencies or crypto-securities.
The draft law classifies as securities all coins that are a debt, equity or derivative instrument based on a blockchain.
It remains to be seen whether the law will actually be approved and introduced. However, the new draft law shows a clear trend that governments around the world are addressing the issue of cryptocurrencies. As CNF reported yesterday, new legal regulations will come into force in Germany on January 1, 2020, which will place the custody service of cryptocurrencies under German financial supervision.
There will be far-reaching changes for both cryptocurrency exchanges worldwide that want to operate in Germany as well as German users.