Bill Proposes National Crypto Regulatory Framework

Published on by Coindesk | Published on

Sep 24, 2020 at 16:00 UTCUpdated Sep 24, 2020 at 16:28 UTC.A new bill could bring cryptocurrency exchanges under a single federal framework.

The Digital Commodity Exchange Act of 2020, introduced Thursday by Rep. Michael Conaway, seeks to create a federal definition of "Digital commodity exchanges," putting them in their own legal category and charging the Commodity Futures Trading Commission with oversight.

The bill outlines a new framework for digital currencies, treating them similarly to commodities under the Commodities Exchange Act, which governs that asset class.

Under the framework, crypto exchanges would enjoy a federal jurisdiction, allowing them to operate in the entire U.S. rather than applying for 49 different state money transmission licenses.

Conaway is the ranking member on the House Committee on Agriculture, which oversees commodity exchanges in the U.S. The committee's Senate counterpart, the Senate Committee on Agriculture, Nutrition and Forestry, oversees the CFTC.The DCEA wouldn't create prescriptive rules on how exchanges can comply with the new law.

"The regulated entity is given flexibility on how to meet those principles, but the CFTC has oversight and can decide if it has met those principles or not. The regulatory regime under the CEA works in large part because it creates a more flexible framework and lets regulated entities be more innovative."

The Conference of State Bank Supervisors announced earlier this month that it was consolidating its supervision exams for certain crypto exchanges, and there may be plans in the works to streamline the application process for startups to avoid needing more than 50 state and territory licenses in order to operate nationally.

The Office of the Comptroller of the Currency, a federal banking regulator, wants to bypass the state-by-state regime entirely, instead creating a national payment charter that would let exchanges operate across state lines.

If enacted, the bill would preempt the state money transmitter licensing regime entirely.

If the companies then deliver a token which meets the definition of a digital commodity under the new bill, "Transactions involving that asset would be subject to the regulatory regime provided in the DCEA," the document said.