Digital asset regulation proposal

On July 28, 2021, Representative Don Beyer (D-VA) introduced the Digital Asset Market Structure and Investor Protection Act, which aims to protect consumers and promote innovation by incorporating digital assets into existing financial regulatory structures. More specifically, the bill would do the following:

* 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 digital assets.

* Provide legal certainty on the regulatory status of the top 90% of the digital asset market (determined by market capitalization and transaction volume) through a joint SEC / CFTC rule-making process.

* Require that digital asset transactions that are not recorded in the publicly distributed ledger be reported to a registered digital asset trading repository within 24 hours.

* Add digital assets and digital asset securities to the legal definition of “monetary instruments” under the Banking Secrecy Act.

* Give the Federal Reserve explicit power 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 Treasury has the power to authorize or prohibit the US dollar and other fiat-based stablecoins.

* Ask the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), and the Securities Investor Protection Corporation (SIPC) to issue consumer advisories on the “non-coverage” of digital assets or digital asset securities.

* Require legislative recommendations from FinCEN, SEC and CFTC to clarify the lines of demarcation between who should register as a money services business and who should register on the stock or commodity exchange raw.