#Establishing New Market Structure Rules for Digital Assets: A Look at the Recent US Bill

On April 21st, it was announced that the US House of Representatives and Senate have jointly formulated a bill to establish new market structure rules around digital assets. This bill is in sync with another regulatory measure aimed at promoting a bipartisan framework for stabilizing the currency.

The US House of Representatives and Senate have begun to jointly formulate new market structure rules around digital assets

Digital assets have been a topic of controversy since their inception. While some people see them as the future of finance, others are wary of their implications for financial stability and regulation. However, the US House of Representatives and Senate have recently come together to formulate a bill aimed at establishing new market structure rules for digital assets. This article takes a closer look at the bill and its implications for the future of digital assets.
##Introduction
The bill, which was announced on April 21st, intends to provide much-needed clarity and regulatory oversight to the digital asset market. Specifically, the bill seeks to:
– Define digital assets and determine which regulatory bodies should oversee them
– Provide clarity around custody and safekeeping of digital assets
– Implement measures to prevent fraud and manipulation in the digital asset market
– Establish proper disclosure requirements for digital assets
– Ensure that companies dealing in digital assets comply with existing anti-money laundering (AML) and know-your-customer (KYC) regulations
These regulatory measures are in sync with another bill proposed in March that aimed to promote a bipartisan framework for stabilizing the currency.
##Defining Digital Assets
One of the primary objectives of the bill is to define digital assets and determine which regulatory bodies should oversee them. Currently, digital assets fall into a regulatory gray area, which has caused confusion and legal uncertainty for businesses operating in the space. The bill proposes that:
– Digital assets should be classified as commodities, which would bring them under the purview of the Commodity Futures Trading Commission (CFTC)
– Digital assets that qualify as securities should be regulated by the Securities and Exchange Commission (SEC)
– The Financial Crimes Enforcement Network (FinCEN) should regulate entities that engage in money transmission involving digital assets
This clear classification of digital assets should provide much-needed guidance for businesses in the space and ensure that regulators have the tools they need to oversee the market.
##Custody and Safekeeping
Another important aspect of the bill is the provision of clarity around custody and safekeeping of digital assets. Currently, there is little guidance around how digital assets should be stored and safeguarded, which has led to high-profile hacks and losses. The bill proposes that:
– Any entity that holds custody of digital assets worth more than $10,000 must hold a Federal Deposit Insurance Corporation (FDIC)-insured account with a US bank
– Digital asset custodians must also have a certain level of cybersecurity in place to protect the assets they hold
These measures should help prevent digital asset losses due to hacks or security breaches.
##Preventing Fraud and Manipulation
One of the biggest concerns around the digital asset market is the potential for fraud and manipulation. The bill seeks to address this by implementing measures to prevent such activities. Specifically, the bill proposes that:
– The CFTC should have the power to investigate and prosecute fraud and manipulation in the digital asset market
– The SEC should have the power to investigate and prosecute fraud and manipulation in digital assets that qualify as securities
– The bill would also give the SEC the power to provide exemptions to certain digital asset offerings
These measures should help ensure that the digital asset market operates in a fair and transparent manner.
##Disclosure Requirements
Another important aspect of the bill is the establishment of proper disclosure requirements for digital assets. Currently, there is little guidance around how digital asset companies should disclose information to investors, which has led to confusion and legal uncertainty. The bill proposes that:
– Digital asset companies must provide investors with clear and comprehensive information about the asset they are investing in
– Companies must also provide information about their business practices, management structure, and financial status
– Digital asset companies must also disclose any potential risks associated with the asset they are offering
These measures should help ensure that investors have the information they need to make informed decisions about investing in digital assets.
##Compliance with AML and KYC Regulations
Finally, the bill seeks to ensure that companies dealing in digital assets comply with existing AML and KYC regulations. The bill proposes that:
– Any entity that engages in money transmission involving digital assets must comply with AML and KYC regulations
– The Secretary of the Treasury should establish rules around AML and KYC compliance for digital asset companies
These measures should help prevent digital assets from being used for illicit purposes.
##Conclusion
The joint bill introduced by the US House of Representatives and Senate represents a significant step forward for the digital asset market. By providing much-needed clarity and regulation, the bill should help prevent fraud, promote transparency, and ensure that digital asset companies comply with existing regulations. However, it remains to be seen how the bill will be received by the industry and whether it will lead to further innovation and growth in the digital asset market.
##FAQs
###1. What are digital assets?
Digital assets are assets that exist in digital form and are often created and managed using blockchain technology. Examples of digital assets include cryptocurrencies, tokens, and digital securities.
###2. Why has there been so much controversy around digital assets?
There has been controversy around digital assets due to their decentralized nature, potential for fraud and manipulation, and lack of regulatory oversight.
###3. How will the bill impact the digital asset market?
The bill aims to provide clarity and regulatory oversight to the digital asset market, which should prevent fraud, promote transparency, and ensure compliance with existing regulations. However, it remains to be seen how the industry will react to the proposed regulations.
##Keywords
digital assets, market structure rules, regulatory oversight, custody and safekeeping, fraud and manipulation, disclosure requirements, AML and KYC regulations.