Lawmakers in the U.S. have introduced the Digital Commodity Exchange Act of 2020 to create a single, national regulatory framework for cryptocurrency trading platforms, including those that trade bitcoin, ether, their forks, and other cryptocurrencies. On the same day, the Securities Clarity Act was also introduced.
Digital Commodity Exchange Act of 2020
The bill entitled “Digital Commodity Exchange Act of 2020 (DCEA)” was introduced by U.S. House Agriculture Committee Ranking Member Michael Conaway on Thursday. He explained that the proposed legislation “creates a single, opt-in national regulatory framework for digital commodity trading platforms under the jurisdiction of the Commodity Futures Trading Commission (CFTC).” The bill is supported by lawmakers Austin Scott, Dusty Johnson, Tom Emmer, David Schweikert, and Darren Soto.
According to the bill summary provided by Conaway, the legislation aims to “fill in the regulatory gaps” that exist between the CFTC and the U.S. Securities and Exchange Commission (SEC) in digital asset markets, adding:
It creates a framework to regulate trading venues which list emerging digital commodities, such as bitcoin, ether, their forks, and other similar digital assets, for public trading.
It also provides “a regulated process for presold digital commodities to become publicly available for trading,” the summary document details.
Under the proposal, a registered Digital Commodity Exchange (DCE) would be subject to CFTC oversight and regulations, including the “monitoring of trading activity, prohibition of abusive trading practices, minimum capital requirements, public reporting of trading information, conflicts of interest, governance standards, cybersecurity, and more. Exchanges would also be subject to limitations on which digital commodities they would be permitted to offer for trading.”
Conaway added that “Digital commodity trading platforms are currently required to comply with a complicated labyrinth of 53 state and territory regulatory frameworks, hindering the ability for newcomers to enter the market.”
“Registration with the CFTC would preempt the existing state-based money transmitter licensing regime trading venues are currently subjected to,” the summary continues, adding that the current system is “not fit-for-purpose when applied to a spot trading market.” In addition, the document states that “The current regime is cumbersome, requiring separate licensing in each individual state of operation, and insufficient, failing to provide oversight of the trading and market activities that occur on the platform,” emphasizing:
The registration regime is voluntary, but with strong incentives for properly placed trading venues to seek registration. Trading venues would be able to opt into the CFTC Digital Commodity Exchange regime or remain regulated under individual state money transmitter licenses.
Furthermore, a registered DCE would be required to hold customers’ cryptocurrencies in a Qualified Digital Commodity Custodian that is regulated by a state, federal, or international banking regulator. The regulator must impose at least the minimum standards set by the CFTC for the entity to be “qualified.” The full Digital Commodity Exchange Act of 2020 bill can be found here.
A second cryptocurrency-related bill was also introduced on Thursday. Congressman Tom Emmer introduced the Securities Clarity Act “to provide a path to regulatory certainty for digital assets and other emerging technologies under securities law,” he announced. In March, U.S. lawmakers introduced the Cryptocurrency Act of 2020.
What do you think about the Digital Commodity Exchange Act of 2020? Let us know in the comments section below.
Digital Commodity Exchange Act of 2020: US Lawmakers Propose Single National Crypto Framework Bitcoin News.