Regulation
Top House Democrats Won’t Rally Their Party Against Crypto Bill Despite Opposition – Coinbase Glb (NASDAQ:COIN)
Ranking Member of the House Financial Services Committee Maxine Waters (Democrat of California) and Ranking Member of the House Agriculture Committee David Scott (D-Ga.) expressed strong opposition to a bill creating a definition for whether a digital asset is a a security or commodity.
What happened: Citing an email to Democratic members of the House of Representatives, Éléonore Muellereconomic journalist at Politico, reported that while members oppose H.R. 4763, the Financial Innovation and Technology for the 21st Century Act (FIT21), they are not actively mobilizing their members to vote against it.
NEW: House Democratic leaders said today they will NOT oppose the House Republicans’ crypto bill, I’m told.
The whip question sent to members this morning states that Waters and Scott “strongly oppose” the bill, but does not urge them to vote “no”: https://t.co/V3DSjewYzV pic.twitter.com/lORrUIo4RZ
– Eleanor Mueller (@Eleanor_Mueller) May 20, 2024
Waters and Scott argue that the bill undermines long-standing legal precedents and injects uncertainty into the traditional securities market.
“This language undermines decades of legal precedent and case law, thereby creating uncertainty in our traditional securities market,” they wrote in an email obtained by Politico.
The bill proposes a safe harbor provision under which entities can file an “intent to register” if they meet specific requirements, thereby protecting them from existing securities laws and regulations until new rules be finalized by the Securities and Exchange Commission (SEC) and Commodity Futures Trading. Commission (CFTC).
They say this would “weaken investor protections and open the door to fraud and market manipulation.”
In a “Dear Colleague” letter posted on the House Financial Services Committee Democrats page, Waters and Scott expand on their opposition, calling the bill “law not fit for purpose.”
They list several concerns, including that the bill would create “a pathway for ‘investment contract assets’ without another regulator,” leaving them largely unregulated.
Read also: Fidelity files S-1 amendment for Spot Ether ETF with SEC
The legislation, if passed, would prevent shareholders from suing publicly traded companies, preempt domestic regulations on digital assets, weaken fiduciary requirements and undermine capital markets, according to the letter.
The email also urges lawmakers to vote against H.R. 192, a bill introduced by Majority Whip. Tom Emmer (R-Minn.) aimed to prevent the Federal Reserve from issuing a central bank digital currency (CBDC).
They argue that the bill’s “overly broad definition” of CBDCs could harm the Fed’s ability to conduct monetary policy.
Despite the opposition, FIT21 is supported by a coalition of organizations and digital asset companies, including Coinbase (NASDAQ:PIECE OF MONEY), Kraken And Andreessen Horowitz.
Supporters argue that the bill provides a much-needed regulatory framework for the digital assets sector in the United States, which currently lacks clear guidelines.
The bill seeks to define whether a digital asset is a security or commodity, expand the CFTC’s authority to register and regulate digital commodities, and require the CFTC and SEC to jointly issue rules for assets not otherwise classified.
And after: The potential implications of these legislative developments will be a focus for Benzinga. The future of digital assets event on November 19, where industry leaders, investors and policymakers will come together to discuss the evolving role of digital assets in the global financial landscape.
This event promises to provide valuable information on how these regulatory decisions will shape the the future of cryptocurrency investments.
Read next: One-time Bitcoin ETF inflows of $241 million on Monday fuel rally above $70,000
Image: Shutterstock
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