A leaked draft bill from the United States began to spread earlier on Twitter today, drawing the attention of several crypto influencers. The crypto-related proposal looks to advocate a much more stringent regulatory environment for the blockchain industry.
Possible Blow to the Crypto Industry
The leaked draft suggests precise restrictions to put the developing crypto space in line with the law. The draft, now circulating on Twitter, focuses on various crypto entities, such as decentralized finance (DeFi), decentralized autonomous organizations (DAOs), stablecoins, and exchanges.
According to the document, the authorities’ primary concern is user protection. To do this, the draft requires any crypto service provider in the United States to register lawfully, regardless of any necessary anonymity. Consequently, the new rule might significantly restrict the number of anonymous crypto projects operating on US soil. Unregistered crypto platforms are not off the hook as they would be subject to taxes.
Additionally, the proposed legislation is also concerned with further regulations of crypto exchanges. According to the 600-page article, exchanges could witness a rise in compliance costs, which will result in increased exchange fees. The document further revealed that platforms that trade single digital assets will be classified as exchanges. This implies that automated market makers (a component of decentralized exchanges) would also be considered an exchange.
Furthermore, the proposal specified that exchanges cannot liquidate users’ funds in the event of insolvency. In this regard, exchanges must provide users with terms of service to ensure agreement before using their services.
Following the spill, numerous experts expressed worry about the tight policies. Some, however, are dismissing the development, citing that the leak is merely a draft. Crypto analyst Adam Cochran commented that the draft provides cryptocurrency clarity but comes at a high cost and with struggles. Overall, if the bill passes, the cryptocurrency market could face significant challenges. Cochran is confident the bill could favor some crypto entities in the long-term, however.
New Draft Bill to Integrate Crypto into Existing Systems
Before the leak, Senators Cynthia Lummis and Kirsten Gillibrand affirmed their readiness to introduce a draft bill to the Senate. “We’ve been teasing it for months,” Lummis said, a nod to the government’s growing interest in accelerating crypto regulation.
We’ve been teasing it for months, but the time is almost here – a proposal to fully integrate digital assets into our financial system. Excited to finally unveil this effort next week. Stay tuned 👀 👀 👀
— Senator Cynthia Lummis (@SenLummis) June 3, 2022
According to a piece by Politico, the draft intends to provide responsible financial innovation while also fully integrating virtual assets into the regulatory framework. One of the legislators’ priorities is to give the Commodity Futures Trading Commission more powers and authority. However, this is also uncertain because the Securities and Exchange Commission (SEC) is likewise heavily involved in cryptocurrency regulation.
Other subjects discussed in the bill include the formation of a self-regulatory entity and the formation of new stablecoin laws. As earlier reported, the recent Terra crash continues to hasten several crypto-focused regulatory measures.