On April 27, the US House Agriculture Committee held a hearing in its Subcommittee on Commodity Markets, Digital Assets, and Rural Development titled, "The Future of Digital Assets: Identifying the Regulatory Gaps in Spot Market Regulation."
Concurrently, the House Financial Services Committee held a hearing in its Subcommittee on Digital Assets, Financial Technology and Inclusion titled, "The Future of Digital Assets: Identifying the Regulatory Gaps in Digital Asset Market Structure."
These complementary hearings were coordinated by Republican leadership in the Committees to identify regulatory gaps related to digital assets. Next month, the committees plan to hold a joint subcommittee hearing to consider ways to close those gaps.
"Our Committees are embarking on an unprecedented joint effort to pass and sign into law clear rules of the road for the digital asset ecosystem. We must strike the appropriate balance to protect consumers without stifling responsible innovation… We are committed to finding workable solutions that provide much-needed regulatory clarity and certainty, while still adhering to time-tested principles that protect market participants," Republican leaders on the related committees and subcommittees said in a joint statement prior to the hearings.
The House Agriculture Subcommittee Hearing featured witnesses who generally agreed there is an existing gap in the regulation of spot digital assets. They also generally agreed that the US Commodity Futures Trading Commission is a capable regulator that could step in, should Congress pass legislation expanding the Commission's authority.
Witnesses and Members of the Committee expressed concerns about the current lack of regulatory clarity for digital assets and concerns that it is forcing many companies to move offshore. Other topics raised by Members of the Committee focused on customer protections for how to improve protections for retail market participants.
Financial Services Subcommittee
The House Financial Services Subcommittee Hearing witnesses generally expressed support for Congress enacting legislation to clarify the regulatory framework around digital assets in the US. One witness, however, called for the banning of digital assets in the US or, short of that, a separation of banking and digital assets and an amendment to the definition of "security" to clarify that all crypto assets are subject to the SEC's jurisdiction.
Republican Members of the Subcommittee expressed strong support for enacting a legislation clarifying the regulatory framework of digital assets. Democratic Members of the Subcommittee expressed varying support for legislative clarification – with many voicing support for the existing legal framework. Some members highlighted concerns about AML/KYC issues related to digital assets and blockchain technology and the use of digital assets for illicit activity.
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