- US House Financial Services Committee has taken measures to reclaim apex position with clear crypto regulatory frameworks.
- The move comes as UK, EU, Singapore, and Australia jurisdictions threaten to dethrone the US with more sector clarity.
- The HFSC challenges Howey Test’s statutes, seeking to allow digital assets, not inherently securities, to be offered as investment contracts.
With crypto and blockchain technology mainstreaming, different countries are pushing to secure the apex position. With this resolve, countries set regulations to create a crypto-friendly environment, hoping to attract crypto-based businesses. On the back of the strict regulatory climate from the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC), America’s position was threatened, with external players capitalizing on the pressure to entice industry powerhouses.
Also Read: Disgraced FTX CEO Sam Bankman-Fried under fire for leaking documents, intimidating witnesses.
US HFSC moves to take back power with clearer regulatory frameworks
US House Financial Services Committee (HFSC) has taken the first step to reclaim the top position on metrics of countries with the friendliest regulatory atmospheres. In a July 26 meeting, the Committee proposed the “FIT for the 21st Century Act,” resulting from a unique collaboration between the House Financial Services and Agriculture Committees.
Led by Chairman Patrick McHenry, the Committee has set out to establish clear rules for the digital asset ecosystem. Citing the chairperson:
The FIT for the 21st Century Act is a historic first step towards achieving legislative clarity for digital assets, providing robust, time-tested consumer protections, and facilitating a regulatory environment that allows this technology to flourish in the United States.
Standing as the first-ever legislative markup of digital asset legislation, it takes over from where the Bitcoin Whitepaper left off, carrying on the baton to establish a conventional financial system built on decentralized transactions.
The development is a bold attempt to restore America’s position as “the global leader in technology innovation, invention, and adoption.” It seeks to deconstruct the narrative that the UK, EU, Singapore, and Australia have dethroned the US from this position by offering a better regulatory playing field.
As other jurisdictions like the UK, the EU, Singapore, and Australia move forward with clear regulatory frameworks for digital assets, the United States is at risk of falling behind. Today, this Committee is taking the first step to fix this.
US HFSC to challenge the Howey Test
Leveraging the potential of blockchain technology to revolutionize digital asset ownership, the Committee has established a new digital asset market structure legislation that challenges the statutes of the Howey Test, a formula used to define a security. The Howey Test is a threshold that an investment must meet to be considered a security and regulated by the SEC.
With the new legislation, the HSFC promotes that:
Digital assets, not inherently securities, may be offered as part of an investment contract, but that does not make them securities.
The bill focuses on two key issues to demystify this assertion and seeks to pair them.
- Decentralization
- Functionality
According to McHenry, the bill comes after years of consultation, drawing lessons from the collapse of Sam Bankman-Fried’s crypto empire, FTX. It also draws insights from six digital asset hearings held in 2023, with Coinbase and Binance exchanges cited for trading unregistered securities.
The bill is subject to discussion to provide “much-needed legal clarity and certainty for the digital asset ecosystem.”
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