The ongoing concern that the USA, as one of the biggest cryptocurrency and blockchain nations, has very little regulatory infrastructure or frameworks for the industry, is finally being addressed by Representative Paul Gosar (R-AZ)
Gosar announced that he has tabled a bill — the Crypto-Currency Act of 2020 — with the intention of categorising cryptocurrencies in order to make them more palatable and understandable to regulators in the USA. The hope is, as, with most cryptocurrency regulations, that clarity and legitimacy will be achieved for the industry under a bill like this.
Globally, there is an ongoing drive to provide a regulatory framework for the nascent industry to flourish in. Recently, in South Korea, cryptocurrencies were officially made legal through an amendment to the Special Reporting Act. Even India, which once had a banking ban on crypto, has changed its tune and offered clarity in that regard.
Most recently, France, in a landmark case, declared that Bitcoin had the same legality as fiat money and thus was under the same obligations but also received similar protections.
Commodities rather than currencies
According to the bill from Gosar, digital assets will be divided into three categories: crypto-commodity, crypto-currency and crypto-security. Respectively, the three categories would be governed by the Commodity Futures Trading Commission (CFTC), the Secretary of the Treasury via the Financial Crimes Enforcement Network (FinCEN), and the Securities and Exchange Commission (SEC).
For Bitcoin, the major cryptocurrency would rather be seen as a crypto-commodity, driving its narrative as a store of value even further. The idea of a cryptocurrency would be more suited to something like Tether’s USDT, or perhaps even a CBDC issued by the US Fed, should it come to that.
The language behind crypto-securities remains understandable as: “all debt, equity, and derivative instruments that rest on a blockchain or decentralized cryptographic ledger.”
The manner in which the US has approached the burgeoning cryptocurrency space thus far has been quite offish, at best. There have been no threats of bans or anything to that end, but there has been a lot of suspicion and skepticism. With that, innovation has been heavily stifled, as was witnessed with the Senate’s treatment of Facebook’s Libra.
However, should a bill like this pass, the US would start its journey to defining and outlining what can and cannot be achieved with cryptocurrencies in the country. Ambiguity is a much bigger threat to the crypto industry than firm regulations. In order for the space to grow, there needs to be well defined regulatory outlines.