US House Proposes Digital Asset Regulation Bill, Defines SEC/CFTC Roles

Addressing the ongoing need for clear regulatory guidelines in the digital asset sector, lawmakers in the U.S. House of Representatives have introduced draft legislation aimed at establishing a comprehensive framework. This proposal seeks to delineate supervisory roles for key financial regulators and bring structure to the rapidly evolving cryptocurrency market within the United States.

Dividing Regulatory Oversight

A central component of the proposed legislation involves assigning distinct responsibilities to the nation’s primary financial watchdogs: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The bill outlines a division of labor intended to clarify jurisdiction:

* The SEC would oversee aspects related to capital formation, including initial token sales and public offerings of digital assets that qualify as securities under existing law.
* The CFTC would be granted authority over the trading of digital commodities on secondary markets, such as exchanges. This remit includes supervising brokers and the trading platforms themselves.

This separation aims to provide market participants with a clearer understanding of which agency’s rules apply to specific activities and asset types.

Framework Requirements and Registration

Beyond defining agency roles, the draft bill introduces requirements for market participants. It details necessary disclosures and outlines a registration process for cryptocurrency exchanges. Furthermore, the legislation proposes the establishment of a transparent registration system specifically for companies dealing in what the bill defines as digital commodities.

To facilitate a smooth transition, the proposal includes provisions for firms to operate before full licensing is implemented. Companies could continue their activities by submitting a preliminary notification of their intent to register with the appropriate regulator. As part of the oversight process, regulators would require firms to provide detailed information regarding:

* The types of digital assets they handle.
* Their sources of funding.
* The objectives behind any capital-raising efforts.
* Methods used for safeguarding customer assets.

Key Provisions and Objectives

The legislative text explicitly addresses token sales, positioning them within the regulatory purview, primarily under the SEC when security-like characteristics are present. Importantly, the bill also enshrines protections for the practice of self-custody, stating that no regulatory body would be permitted to prohibit individuals from holding their own digital assets in personal wallets.

Highlighting the goals of the legislation, Representative French Hill, a Republican member of the House Financial Services Committee, noted the effort seeks to build consensus for an effective regulatory system. He emphasized the importance of providing legal certainty for the digital asset ecosystem, enhancing consumer protections, and promoting the long-term stability of digital markets in the U.S. The bill also suggests the creation of dedicated innovation offices within both the SEC and CFTC to better engage with emerging financial technologies.