U.S. lawmakers propose a draft regulatory framework for encryption assets, clarifying the responsibilities of the SEC and CFTC.

Recently, the leaders of two important committees in the U.S. House of Representatives jointly released a discussion draft aimed at establishing a comprehensive federal regulatory framework for the U.S. encryption asset industry.

This draft was jointly proposed by several Republican lawmakers, including the chair of the House Financial Services Committee, the chair of the Agriculture Committee, and the chairs of relevant subcommittees. They stated that the purpose of the bill is to coordinate the regulatory responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), while also providing clear legal definitions for key terms in the blockchain and encryption asset fields.

The chair of the Financial Services Committee emphasized that this discussion draft is further developed based on previous work, aiming to provide a long-term effective framework for protecting consumer rights and maintaining the United States' leading position in the field of digital innovation. He also stated that the committee plans to extensively solicit public opinions and work with the government to promote the passage of the final bill.

The legislative draft introduces definitions for several core concepts, including digital goods, blockchain systems, decentralized governance, compliant stablecoins, and mature blockchain systems. Notably, the draft explicitly states that "end-user distribution" conducted through methods such as mining, staking, or user rewards does not fall under securities or constitute a sales act according to existing laws.

The chairman of the Agricultural Committee emphasized the urgency of legislative clarity, pointing out that this framework will fill regulatory gaps and provide developers and users with the certainty they have long been seeking.

The draft sets forth a registration pathway for digital commodity exchanges, brokers, and dealers under CFTC regulation, while allowing the SEC to retain jurisdiction over securities and certain mixed assets. Entities engaged in custody, trade facilitation, or direct interaction with clients must adhere to the newly defined registration and disclosure procedures.

The chair of the digital assets subcommittee stated that this marks the beginning of a new era for digital assets, with the House of Representatives leading the trend. Another subcommittee chair also believes that the U.S. must provide a reasonable regulatory framework to maintain its status as a global center for encryption asset investment and innovation.

The draft also retains protections for decentralized finance (DeFi) protocols and self-custody. It stipulates that as long as DeFi trading protocols and messaging systems do not custody user funds or exercise discretion, they are not required to comply with traditional financial regulations. Furthermore, the bill prohibits the Treasury or the Financial Crimes Enforcement Network (FinCEN) from issuing rules that restrict individuals' ability to self-custody encryption assets through wallets.

To initiate formal legislative discussions and gather feedback from stakeholders, the relevant committee has scheduled a joint hearing in the near future, titled "The Future of American Innovation and Digital Assets: A Blueprint for the 21st Century."

The draft also includes provisions regarding the joint formulation of rules by the SEC and CFTC, as well as conducting research on DeFi, NFTs, and blockchain infrastructure by expanding the functions of the innovation office of federal agencies.

Overall, the proposed bill aims to eliminate uncertainty in U.S. regulation of encryption assets by establishing legal definitions and clear jurisdictional boundaries, while also encouraging the responsible development and regulation of the digital asset market.