• Can Bitcoin Legislation Introduce By A US Representative Effect The Crypto Industry? A Leading Attorney Explains

  • In the United States Congress, U.S. Representative Don Beyer (D) of Virginia’s 8th district introduced new Bitcoin and cryptocurrency legislation. The Digital Asset Market Structure and Investor Protection Act would incorporate digital assets into existing financial frameworks in the state.

    Consumers will be “protected,” money laundering and illegal activity will be prevented, and innovation will be encouraged. It recognizes the potential of Bitcoin and cryptocurrencies and seeks to fill a need that has long been disregarded by federal agencies in the United States.

    Gabriel Shapiro, General Counselor at Delphi Digital, outlined the essential points of the act, as well as its benefits, drawbacks, and other issues. Among the positives, the lawyer considered the law to be factual and well-informed, which is “more than I can say about other blockchain legislation.”

    The act would assess whether cryptocurrency and tokens are securities or commodities. As a result, the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC) may regulate them (CFTC).

    This would provide more clarity to the market and aid certain crypto firms in avoiding regulatory lawsuits or punishment. According to Shapiro, the act provides for a three-year grace period before any “de-securitization.”

    The bill would promote transparency by creating a system for off-chain transactions to be aggregated and recorded with the help of the CFTC, clarifying the term “actual delivery,” and creating a “quite restricted” definition of organizations acting as virtual asset service providers. Shapiro continued:

    (…) The bill enables the development of ‘digital copies of Federal reserve notes’ on a distributed ledger and grants legal currency status to them without any strange surveillance restrictions.

    The act calls for a joint report from “major” agencies and regulators to better understand the Decentralized Finance (DeFi) industry. Instead of rushing to control or tax the industry, legislators and politicians will have a better understanding of DeFi protocols, smart contracts, and other entities.

    Is There a Bitcoin Bill That Will Outlaw Privacy and Stablecoins?

    In principle, the bill would focus a spotlight on critical issues that require a response from authorities, while avoiding those who refuse to seek further information. Shapiro, on the other hand, pointed out that the bill could be used arbitrarily.

    According to the plan, the SEC and CFTC would have the authority to determine which of the top 25 cryptocurrencies are securities and which are commodities. Furthermore:

    Although it provides a three-year grace period for Howey tokens (similar to Hester Peirce’s safe harbor proposal), it does not solve the “chicken/egg” problem of insufficient decentralization because it simply suspends registration requirements, not trading requirements*.

    The SEC would appear to have additional power to determine whether a token is secure during the de-securitization process. The bill’s approach to stablecoins, on the other hand, appears to be the worst element.

    They would assert that “No person may issue, use, or cause to be used” a digital asset pegged to a fiat currency unless the US Secretary of the Treasury approves it. According to Shapiro:

    (…) Given the breadth of the ‘fiat-based stablecoin’ concept, this one is a bit of a puzzle… Making the *issuance* of an unregistered stablecoin unlawful in trade seems to sense, but what about the *use*? Stablecoins, such as Schedule I pharmaceuticals or fissile material, are treated in this way.

    Furthermore, the bill requests that the Financial Crimes Enforcement Network (FinCEN) undertake efforts to prohibit “anonymity enhanced tokens” and “anonymizing services.” According to the legal expert, the bill would oblige companies to “monitor anonymizing transactions,” which Shapiro described as “essentially impossible.”

    (…) Applying securities law to stablecoin regulation would be more consistent with existing legislation and avoid Treasury drawing arbitrary limits in an essentially unappealable discretionary procedure, while allowing algorithmic stability to breathe.

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