21st Century Act CRYPTO BILL | How Crypto Regulation will change the industry
A key US House committee recently adopted two bills that could finally provide crypto companies with some regulatory clarity, notably defining the distinctions in jurisdiction between the US securities and commodities regulators.
In an effort to meet the demands of cryptocurrency businesses and their lobbyists in the hopes that the sector will create new jobs, many states are vying for position. However, some consumer advocates are concerned that this attempt to appease everyone may make investors and companies more susceptible to the frauds and unsafe business practices that have dogged cryptocurrency’s early development.
The new money-transfer legislation in Florida was developed over several months in collaboration with Samuel Armes, the founder of Tortuga Venture Fund and a Republican representative from South Miami named Vance Aloupis Jr.
On July 26, a large number of US senators approved the Financial Innovation and Technology for the 21st Century Act and the Blockchain Regulatory Certainty Act. The Financial Innovation and Technology for the 21st Century Act, which would provide guidelines for cryptocurrency enterprises on when to register with either the Commodity Futures Trading Commission or the Securities and Exchange Commission, was passed by the House Financial Services Committee in a 35-15 vote.
#PASSED: In a historic first, the House Financial Services Committee just advanced the BIPARTISAN FIT for the 21st Century Act to protect consumers and provide clear rules of the road for the digital asset ecosystem.
Up next: @HouseAgGOP considers the legislation tomorrow. pic.twitter.com/kOyLmolPuz
— Financial Services GOP (@FinancialCmte) July 26, 2023
A procedure for companies to verify with the SEC that their initiatives are sufficiently decentralized is also outlined in the Republican plan. This procedure enables businesses to register digital assets as digital commodities with the CFTC.
Republican Congressman French Hill, who is also the vice chairman of the House Financial Services Committee, expressed the satisfaction that the bill had cleared its first obstacle and received unanimous support from the committee.
The bipartisan Blockchain Regulatory Certainty Act, sponsored by Democratic Congressman Darren Soto and Republican Congressman Tom Emmer, aims to establish rules that will make it easier for “blockchain developers and service providers” like miners, multisignature service providers, and decentralized finance platforms to operate.
How Crypto Regulation will change the industry
Cryptocurrency regulation was still evolving and varied significantly from one jurisdiction to another. However, I can provide some general insights into how crypto regulation could potentially impact the industry. Keep in mind that developments may have occurred since then, so it’s advisable to consult more recent sources for the latest information.
1. Clarity and Legitimacy:
Clearer regulations could bring legitimacy to the cryptocurrency industry. Well-defined regulations might encourage institutional investors and traditional financial institutions to participate, leading to increased adoption and investment.
2. Investor Protection:
Regulation could provide a level of investor protection by requiring greater transparency from projects and exchanges. This might help prevent fraud, scams, and misleading practices, thereby fostering trust among participants in the ecosystem.
3. Market Stability:
Proper regulation might help prevent extreme price volatility and market manipulation by ensuring that trading practices are monitored and controlled. This could create a more stable environment for both traders and long-term investors.
4. Innovation and Development:
It’s critical to strike the correct balance between regulation and innovation. Overly restrictive regulations could stifle innovation in the blockchain and cryptocurrency space, potentially driving development to more permissive jurisdictions.
5. Global Standardization:
If multiple countries implement similar regulatory frameworks, it could facilitate cross-border transactions and cooperation. A globally standardized approach could also simplify compliance for international projects and users.
6. Taxation and Reporting:
Regulatory clarity could lead to more consistent tax treatment of cryptocurrencies. This could help individuals and businesses understand their tax obligations related to trading, mining, and other crypto activities.
7. Compliance Costs:
Depending on the nature of the regulations, compliance costs for crypto businesses could increase. This might lead to consolidation in the industry, favoring larger and more established players over smaller startups.
8. Decentralization Challenges:
Stricter regulations might pose challenges to the decentralization ethos of cryptocurrencies. If regulations require more centralized control for oversight and compliance, it could clash with the original ideals of peer-to-peer networks.
9. Privacy and Anonymity:
Regulations could impact privacy-centric cryptocurrencies and technologies. Stricter AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements could challenge the anonymity of certain cryptocurrencies and privacy-oriented users.
10. Legal Clarity:
Cryptocurrency regulations could provide legal clarity for individuals and businesses engaged in crypto-related activities. This could encourage entrepreneurs to build and invest in the industry without fearing legal repercussions.
It’s important to note that the impact of cryptocurrency regulation largely depends on the specific approach taken by different governments and regulatory bodies. The industry is still relatively young and evolving, so the regulatory landscape is likely to continue changing as governments adapt to the challenges and opportunities presented by cryptocurrencies and blockchain technology.
Many states are competing for position in an effort to accommodate the demands of the digital currency businesses and their lobbyists in the belief that the sector would generate new jobs. Consumer advocates worry that this effort to please everyone may make investors and businesses more vulnerable to the scams and risky business practices that have plagued cryptocurrency’s early development.
The new money-transfer legislation in Florida was developed over several months in collaboration with Samuel Armes, the founder of Tortuga Venture Fund and a Republican representative from South Miami named Vance Aloupis Jr.
