House Bill Proposes Uniform Federal Framework, CFTC Oversight For US Cryptocurrency Exchanges

In the latest effort to streamline cryptocurrency regulations in the U.S., House Agriculture Committee Ranking Member Michael Conaway (R-Texas) introduced new legislation on Thursday.

The Digital Commodity Exchange Act of 2020 (DCEA) would consider cryptocurrencies as a unique asset class and would be monitored by the Commodity Futures Trading Commission. Conaway commented that the legislation "provides a clear path forward to improve the regulation of digital commodities.”

What Happened: By classifying digital assets into a legal category of its own, DCEA aims at enhancing the regulatory approval framework for cryptocurrency trading platforms. Currently, cryptocurrency exchanges have to navigate multiple state and federal laws which is detrimental for new entrants in the market. According to CoinDesk, this act will treat digital assets like Commodities, and would also have provisions to facilitate fundraising through certain types of Initial Coin Offerings.

Why Does It Matter: The DCEA mechanism will allow cryptocurrency exchanges to operate under the federal jurisdiction by enhancing legal clarity as exchanges would not have to apply for individual money transfer licenses from each state. Exchanges may also be required to maintain customer’s assets with a licensed digital custodian.

From the governance perspective, this act also demarcates the jurisdiction for token offerings between the Securities and Exchange Commission and the CFTC. CoinDesk reported that although the SEC will maintain a pre-sales oversight and the CFTC will take over the supervisory role once the network is launched.

Price Action: Bitcoin traded 3.9% higher at $10,699.60 at press time on Friday.