Republicans Introduce New Digital Asset Law To Prevent More ‘Misinformation And Frustration’


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House Representative Patrick McHenry, the ranked Republican on the House Financial Services Committee, yesterday introduced a new bill to provide a “safe harbor” for digital token innovation, which aims to adopt new technologies while maintaining investor protection, according to a statement.

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The Clarity for Digital Tokens Act of 2021 “will provide much needed legal clarity and certainty for this rapidly growing industry,” the statement said.

“The United States should be a global leader, not a global follower, when it comes to digital assets,” Republican leader McHenry said. “Unfortunately, our current regulatory framework threatens to push this technology – and the jobs created by this rapidly growing industry – abroad. My bill, which builds on the excellent work of SEC Commissioner Hester Peirce, will help provide the necessary legal certainty for digital asset projects when they launch, ”he said in the press release.

The bill establishes a new concept of regulatory sandbox initially proposed by SEC Commissioner Hester Peirce, according to the announcement. It will provide network developers with a “safe harbor” in which to facilitate participation while allowing the development of a functional or decentralized network, under certain conditions, exempt from the registration provisions of federal securities laws. movable.

Ron Geffner, a former SEC attorney who now oversees Sadis & Goldberg’s financial services department, told GOBankingRates the proposed legislation is needed.

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“There is significant confusion with emerging digital currency entrepreneurs as to what they can and cannot do and this serves to provide a framework for these people. Unfortunately, right now, while many entrepreneurs seek to follow federal guidelines, many people are investing little or no effort to comply, ”he said.

“So, in addition to legislation, we need regular and consistent regulatory enforcement to motivate the market to follow proposed regulatory requirements. Otherwise, it creates an unfair playing field and leads to misinformation, frustration and harms the digital asset community as a whole, ”Geffner added.

Additionally, the bill will allow entrepreneurs seeking to build decentralized networks in which a token serves as a medium of exchange or provides access to a network function to hand the tokens into the hands of other people.

“At the same time, this bill ensures that transactions are carried out in a safe and responsible manner,” according to the announcement.

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The bill has been welcomed by many experts. “This strong legislation, based on SEC Commissioner Hester Peirce’s Safe Harbor 2.0, seeks to clarify the opaque US securities laws as they apply to cryptocurrencies,” Kristin said. Smith, executive director of the Blockchain Association, in the statement. “This regulatory uncertainty has stifled innovation for years, leading to an exodus of innovators from the United States to jurisdictions with a clear regulatory framework. We applaud Representative McHenry’s efforts to change that sentiment and establish a clear safe harbor process for innovators to work with regulators to build the future of finance and protect consumers.

Also yesterday, the House Financial Services Committee held a hearing with Securities and Exchange Commission (SEC) Chairman Gary Gensler, in which McHenry berated him for his stance on digital assets.

“You have made a number of troubling and contradictory public statements regarding crypto assets and other innovative technologies. When you were here in May, you said that additional legislation is needed to properly regulate digital asset trading. Then, just a few weeks ago, when you testified before the Senate Banking Committee, you said there was “great” clarity in the law, “McHenry said, according to the hearing transcript. .

“You’ve suggested that many digital asset exchanges are unregistered stock exchanges and have even threatened a digital asset exchange by name. So what is it ? Does the SEC want more legislative authority, or is it about to unleash a regulatory tsunami under existing laws? “, he added. After the hearing, McHenry sent a letter to Gensler, reiterating the comments he made during the hearing.

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“You have made a series of disturbing and seemingly contradictory public statements regarding crypto assets and other innovative technologies. I ask you to clarify these comments quickly to avoid any further confusion in the market, ”he wrote.

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Last updated: October 6, 2021

This article originally appeared on Republicans Introduce New Digital Asset Law To Prevent More “Misinformation and Frustration”

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