As the US is grappling with competition from other countries in the crypto sector, multiple ventures, projects, partnerships, and bills are entering this market. Now, Senator Cynthia Lummis, who is vehemently vocal about the importance of the industry, has plans to release a draft of the crypto market structure bill this week.
As the Senator pushes to launch the draft bill, here is what you need to know.
Why is Cynthia Lummis pushing for crypto market structure bill?
Before we briefly dive in, keep in mind that this is a draft bill and not the finalized market structure bill. The US Senate Banking Committee introduced a draft for the crypto market structure bill under the leadership of its Chairman Tim Scott. The discussion draft also has prominent names behind it, including Senators Cynthia Lummis, Bill Hagerty, and Bernie Moreno.
However, Cynthia Lummis earned a profound name in the crypto realm because she has been repeatedly echoing her voice for the bill. Now, she is urging the Senate to launch the draft by the end of this week, specifically because it has been going through several negotiations, and instead of delaying the launch, the bill must be made into legislation soon, according to the Lummis.
For Lummis, the timeline is also urgent as the White House reportedly opposed some provisions in the draft, and the Senator is trying to resolve the issues before the bill faces further delays in release.
Inside the crypto market structure bill
So, what does the bill consist of, and why is it important for crypto?
- Clear rules to define digital asset categories — securities, digital commodities, stablecoins, and ancillary assets; a new category of intangible assets related to securities.
- Distribution of primary oversight among the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC).
- Regulation for intermediaries like brokers, custodians, and exchanges
- Good standard of conduct, like considering customer protection, risk disclosures, asset division, and more.
Among these core discussion points, the draft bill focuses on granting CFTC the power to coordinate digital commodity spot markets while the SEC continues to have authority over initial security offerings.
Now, talking about ancillary assets, they are tied to securities, but they are not really securities.
For instance, a startup company seeks public investment to build a project. Investors get tokens for their funds. If the project succeeds, the company promises that the tokens will surge in value.
So, in this example, the promise or the deal is the security part, whereas the tokens are ancillary assets.
Another important provision in the bill is about market integrity, where exchanges should enhance transparency and avoid any manipulation.
Why is the crypto market structure bill important?
The crypto market structure bill is vital for the US because it provides answers for several questions related to regulatory oversight, rules and regulations, the legality of tokens for trading, and how, when, and where a token can be traded.
Pushback on crypto market structure draft bill
Although Lummis, a top crypto voice among Republican Senators, is pushing to launch the draft bill, Democratic Senator Mark Warner opined that the bill has a few unresolved issues yet. This includes the ethics provisions in the bill that concern White House, which Lummis is trying to negotiate, as mentioned earlier.
Moreover, AFT, a teachers’ association in the US, reportedly registered its opposition to the Senate Banking Committee’s crypto market structure bill. The team describes the bill as a risk for the safety of traditional assets.
The content in the draft bills looks practically advanced, specifically provisions on dividing regulatory oversight and asset classifications. However, it is important to resolve existing issues and then go for the launch. But, as crypto communities argue, if this draft bill does not come out this week, then “it will be kicked down the road over and over.”
