Regulation
CFTC crypto advisors push US toward clearer regulation for digital assets – DL News
- An advisory committee has voted in favor of a report on how to classify digital assets.
- Commissioner Pham, who heads the committee, hopes the taxonomy will bring more nuance to regulators drafting crypto laws.
- The report will help show where new regulation is needed, the commission said.
A group of private-sector cryptography experts wants to bring U.S. crypto laws in line with standards set in the rest of the world.
To do this, the Global Markets Advisory Committee is recommending that the U.S. Commodity Futures Trading Commission adopt a new way of classifying digital assets.
“Digital assets offer a wide range of features, functions and features,” said Caroline Pham, CFTC commissioner and sponsor of the group. DL News in an emailed comment. “How we look at them from a regulatory perspective should reflect those differences.”
Pham said she hoped the committee’s framework on digital assets would help “further advance the debate and promote clarity in U.S. regulations” and help the United States align with international standards on digital assets. of cryptography.
The group said it builds on the classification efforts of global prudential standard-setters and regional authorities, including the Bank for International Settlements and the Financial Stability Board.
Pham has already argued This international pressure could force the United States to follow other jurisdictions, such as the European Union, in passing crypto laws.
The recommendation comes as industry and politicians have launched crypto into the American political discourse, arguing over how best to regulate digital assets ahead of this year’s presidential election.
What is a digital asset
The Global Markets Advisory Committee adopted a report on digital assets this week.
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It recommends that digital assets be divided between financial and non-financial uses, the report asserts while presenting a comprehensive classification system.
The taxonomy breaks down different characteristics of crypto assets, including how they are issued, their fungibility, whether they can be redeemed, and how records are kept.
Whether the digital asset is based on a blockchain or another type of database is not part of the classification.
The question of whether or not cryptocurrencies should be classified as securities is hotly debated in the United States.
The United States Securities and Exchange Commission has launched a barrage against crypto exchanges, saying most cryptocurrencies are securities.
The report states that two types of digital assets can be classified as securities.
The first are tokenized securities, referring to a digital sister token that represents an underlying traditional security.
The second are security tokens, which are described as digital native tokens that meet “the applicable regulatory definition of a security or financial instrument under local law.”
Bitcoin and Ether would be classified as “platform crypto assets,” according to the report, because they are “hardcoded” into their underlying platform.
Bitcoin would also be classified as “digital native” because it is “the original record of value that does not need to be recorded elsewhere to verify ownership,” the report states.
Stablecoins would only be considered stablecoins if they meet the asset collateral requirements, namely “high-quality liquid assets” like cash or US Treasury reserves.
The recommendations “will help us move to places where regulations already exist and we don’t need to adopt new regulations,” said Caroline Butler, CEO of digital assets at BNY Mellon and a member of the group that leads the report, during a meeting. Wednesday.
The committee said that based on its taxonomy of digital assets, it will continue to make policy suggestions to regulators.
It will also help show where new regulations are needed, “or changes to existing regulations, or perhaps outside of regulations,” Butler said.
The committee is not the only CFTC member making recommendations on crypto.
The Technology Advisory Committee recently adopted a “first of its kind» report on the integration of decentralized finance into the regulatory scope.
Inbar Preiss is DL News’ Correspondent in Brussels. Contact the author at inbar@dlnews.com.