The Cryptocurrency Act of 2020 Is 'Dead on Arrival,' Washington Tells Sponsors

Published on by Coindesk | Published on

An omnibus bill aimed at comprehensive reform of U.S. cryptocurrency regulation was introduced Monday by Rep. Paul Gosar.

"The bill looks to provide not only clarity but legitimacy to crypto assets in the United States," said Will Stechschulte, Gosar's legislative assistant, in a press phone call.

While there are existing proposals aimed at providing clear guidance - such as the Token Taxonomy Act and Securities and Exchange Commission member Hester Peirce's "Safe Harbor" proposal - Gosar's bill is the latest to take a holistic approach to crypto regulation.

The bill divides digital assets into three categories: crypto-commodity, crypto-currency and crypto-security with the Commodity Futures Trading Commission, the Secretary of the Treasury via the Financial Crimes Enforcement Network and the Securities and Exchange Commission overseeing each, respectively.

Jerry Brito, executive director of Coin Center, directed criticism at the bill's sponsor, Rep. Gosar, who does not sit on the committees that might discuss his bill.

Whether the bill passes or not, its sweeping ambition is already redefining the scope of crypto regulation.

Attempting to simplify the issues around cryptocurrency and its relationship to the larger economy, the bill is an example of why it's so hard to define what crypto is and how it should be treated.

CoinDesk spoke with lawyers, investors and the bill's writers about how the bill takes on crypto's big regulatory issues and likely goes too far.

Gosar's bill defines crypto-commodities as an "Economic good or service, including derivatives that have full or substantial fungibility; the markets treat with no regard as to who produced [them;] and rest on a blockchain or decentralized cryptographical ledger."

Lawson Baker, head of operations and general counsel at TokenSoft, a technology company automating finance by porting financial assets onto blockchains, noted that the definition given to "Crypto-securities" by the bill does not capture real-world use cases of blockchain technology.