spot market digital asset commodities

The proposed bill sets forth a comprehensive framework for the digital asset ecosystem by bridging regulatory gaps, promoting innovation, and protecting consumers.

By Jenny Cieplak, Marlon Q. Paz, Yvette D. Valdez, Stephen P. Wink, Adam Zuckerman, and Deric Behar

On June 2, 2023, Patrick McHenry, Chairman of the House Financial Services Committee, and Glenn Thompson, Chairman of the House Committee on Agriculture, published a discussion draft of legislation (the Proposed Bill) that seeks to close regulatory gaps and provide a “functional framework” for digital asset regulation in the US. Unlike several other proposed crypto-focused laws around the world, most notably MiCA in the EU, this Proposed Bill largely draws on existing legal frameworks and standards rather than creating an entirely new regime specifically for regulating cryptoassets.

The Proposed Bill grants regulatory authority to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) and clarifies the jurisdictional scope between the two agencies. The CFTC would be granted explicit authority over spot market digital asset commodities, while the SEC would maintain authority over digital assets offered as part of an investment contract (i.e., securities). And while the Proposed Bill would exclude payment stablecoins from the definition of digital commodity under the Commodity Exchange Act (CEA), the CFTC would still be granted jurisdiction over transactions in payment stablecoins “as if” they were digital commodities when transacted on a CFTC-registered entity.

Representatives McHenry and Thompson have stated that their goal in publishing the Proposed Bill is “to strike the appropriate balance between consumer protection and encouraging responsible innovation.” They have also indicated their intention to formally introduce the Proposed Bill on the House floor in early July 2023.