A US Representative, John Rose, has proposed a new bill to create a joint committee between the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to oversee rules for digital assets.
The bill Called the “BRIDGE Digital Assets Act,” would set up a Joint Advisory Committee on Digital Assets with 20 members from outside the government, including individuals involved in cryptocurrency and other parts of the digital asset world.
The SEC is a government agency in the United States that oversees the stock market and other financial markets. Its job is to make sure that companies follow the rules and are honest with their investors. It helps protect people who buy and sell stocks, bonds, and other investments from being cheated or misled.
The CFTC is another U.S. government agency that watches over trading in futures contracts and other commodities like oil, gold, and agricultural products. It ensures that these markets are fair and transparent, preventing fraud and manipulation so that traders can buy and sell these products safely.
The purpose of the new committee, if approved, is to advise both agencies on their rules, regulations, and policies related to digital assets.
“The current heavy-handed, regulation-by-enforcement approach isn’t working and is instead encouraging investment in this key innovation overseas,” said Rose. “The Joint Advisory Committee on Digital Assets will provide a framework for the government and private sector partners to cooperate on a path toward success for the regulatory landscape of digital assets and private sector participants.”
Rep. Rose pointed out that the current method of regulating, known as “regulation-by-enforcement,” hasn’t worked well and has caused digital asset innovation to move to other countries. The bill aims to encourage cooperation between the two agencies, which have often disagreed on how to regulate, especially when it comes to classifying some cryptocurrencies.
The bill also focuses on decentralization and making financial markets more efficient, while prioritizing consumer protection. If passed, it would allow the SEC and CFTC to work together to create a clearer set of rules for the fast-changing digital asset industry.
Who regulates the digital economy?
The regulation of the digital asset sector in the U.S. involves both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), each claiming authority over different aspects of digital assets.
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The SEC primarily views many digital assets as securities, subject to its jurisdiction under federal securities laws. This perspective is based on the “Howey Test,” which determines whether an asset is an investment contract.
The SEC has taken enforcement actions against various entities for failing to register their offerings properly, particularly in the context of initial coin offerings (ICOs).
On the other hand, the CFTC regards certain digital assets, such as Bitcoin and Ether, as commodities. This classification allows the CFTC to regulate futures contracts and derivatives based on these assets.
The CFTC has been active in enforcing regulations against fraud and manipulation in the digital asset markets, bringing numerous enforcement actions against individuals and firms involved in digital asset trading.
The regulatory landscape is complicated by the overlapping jurisdictions of the SEC and CFTC, leading to calls for a unified regulatory framework.
