Congressman Don Beyer (D-VA-08) introduced the Digital Asset Market Structure and Investor Protection Act, legislation that would protect consumers and foster innovation by incorporating digital assets into existing financial regulatory structures.
“Innovation in the digital asset sector creates new goods and services every day as well as many new high-quality jobs. The United States should provide a legal and regulatory environment that fosters this kind of innovation and growth, ”said Representative Beyer. “Digital assets and blockchain technology hold great promise, and it’s clear that assets like Bitcoin and Ether are here to stay. Unfortunately, the current digital asset market structure and regulatory framework is ambiguous and dangerous for investors and consumers. Holders of digital assets have been subject to widespread fraud, theft and market manipulation for years, but Congress has so far ignored representations from industry experts and federal regulators to create a legal framework full. Our laws are overdue, and my bill would kick off the long-awaited process of updating them to give digital asset owners and investors basic protections. “
Since the introduction of Bitcoin in late 2008, digital assets have grown from technological curiosities to financial instruments used by millions of ordinary Americans. Today, there are over 11,000 distinct digital asset tokens, with a market cap of over $ 1.5 trillion. It is estimated that 20 to 46 million Americans own Bitcoin and other digital assets, and that number is expected to increase. Many of these digital asset market participants, who are predominantly average Americans rather than large institutional investors, have been the victims of trading platform hacks, or have been exposed to significant market manipulation or abuse. frauds such as Ponzi schemes.
Digital assets have also been widely used for money laundering and other illicit purposes. For example, in May 2021, the Colonial Pipeline, which supplies gasoline to much of the eastern United States, had its computer system hacked and was forced to pay a ransom of $ 4.4 million. dollars to Bitcoin, which is the preferred currency for ransomware attacks.
Despite the growing importance of Bitcoin and other digital assets in our economy, there is no comprehensive legal framework to regulate the digital asset market or protect market players. The Digital Asset Market Structure and Investor Protection Act of 2021 would foster innovation and employment in the United States by providing legal and regulatory certainty for digital assets, provide fundamental protections for U.S. retail investors and other consumers, improve business relations and transparency, strengthen the law on banking secrecy. digital asset processing requirements and protect US investors in the digital asset industry.
More specifically, the bill:
- Create statutory definitions for digital assets and digital asset securities and give the Securities and Exchange Commission (SEC) authority over digital asset securities and the Commodity Futures Trading Commission (CFTC) with authority over the assets digital;
- Provide legal certainty on the regulatory status of the top 90% of the digital asset market (by market capitalization and transaction volume) through joint SEC / CFTC regulation.
- Require that digital asset transactions that are not recorded in the publicly released ledger be reported to a registered digital asset trading repository within 24 hours to minimize the risk of fraud and promote transparency;
- Explicitly add digital assets and digital asset securities to the legal definition of ‘monetary instruments’, under the Banking Secrecy Act (BSA), formalizing regulatory requirements for digital assets and digital asset securities in order to comply with anti-money laundering, record keeping and reporting requirements;
- Give the Federal Reserve explicit authority to issue a digital version of the US dollar, clarify that digital assets, digital asset securities and fiat coins are not legal tender in the United States, and give the Secretary of the US Treasury the power to authorize or prohibit the US dollar and other fiat-based stablecoins;
- Request the Federal Deposit Insurance Corporation (FDIC), National Credit Union Administration (NCUA), and Securities Investor Protection Corporation (SIPC) to issue consumer advisories on digital asset “non-coverage” or digital asset securities to ensure consumers know they are not insured or protected in the same way as bank deposits or securities; and,
- Require legislative recommendations from FinCEN, SEC and CFTC to clarify the lines between who should register as a money services business and who should register as a stock or commodity exchange .
The text of the law on the structure of the digital asset market and the protection of investors is available here.