US House of Reps. member, Don Beyer has called for the regulations of digital assets including fiat-based stablecoin. The bill aims to improve transparency, reporting, and anti-money laundering enforcement.
A new measure introduced by Virginia Democrat Don Beyer in the United States House of Representatives proposes a broad regulatory and legal framework for digital assets.
The bill, dubbed “The Digital Asset Market Structure and Investor Protection Act of 2021,” takes on practically all of the major grey areas that still exist in the United States when it comes to cryptocurrencies.
One of its main goals is to establish statutory definitions for digital assets and digital asset securities, placing the former within the CFTC’s jurisdiction and the latter under the Securities and Exchange Commission’s.
The SEC and the CFTC would be responsible for giving legal clarification on the regulatory status of the top 90% of crypto assets by market cap and trading volume.
Furthermore, the bill aims to codify regulatory requirements for all digital assets and digital asset securities under the Bank Secrecy Act, defining both as “monetary instruments” to improve transparency, reporting, and anti-money laundering enforcement.
The bill paves the ground for the Federal Reserve to issue a digital dollar by explicitly recognizing it as the sole entity with the power to do so.
It specifically demands on the US Treasury Secretary to have the authority to allow or prohibit the use of US, dollar, and other fiat-based stablecoins.
The proposed investor protection measures include requiring the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Securities Investor Protection Corporation (SIPC) to issue explicit clarifications regarding the “non-coverage” of the digital asset sector so that investors are aware that their assets are not insured in the same way that traditional assets are.
The bill proposes that any digital assets not recorded on a public distributed ledger within 24 hours be reported to a CFTC-registered digital asset trade repository to avoid fraud. The latter is defined as follows in the bill’s text:
“The term ‘digital asset trade repository’ means any person that collects and maintains information or records with respect to transactions or positions in, or the terms and conditions of, contracts of sale of digital assets […] entered into by third parties (both on-chain public distributed ledger transactions as well as off-chain transactions) for the purpose of providing a centralized recordkeeping facility for any digital asset.”
However, unless it or they aim to aggregate/include off-chain transactions as well, the phrase does not refer to the private or public ledger itself or its operator.
Treasury Secretary Janet Yellen recently advised financial regulators that the government has to act fast to establish a regulatory framework for stablecoins, citing the risk they pose to end-users and the potential impact on the country’s financial system and national security.