Several regulations introduced, few materialized
Crypto regulation has been widely discussed as one of the necessary steps for the digital asset market to mature and become truly mainstream. According to a report by the Value Technology Foundation, over 50 bills have already been introduced that address the crypto landscape. These bills address a variety of topics, including crypto taxation, central bank digital currencies, clarity in the regulatory treatment of digital assets, blockchain technology, sanctions and restrictions on the use of crypto by elected officials.
While mature industries often fear regulation because they believe it could stifle innovation, many crypto advocates are looking for regulation and guidance to support the nascent digital asset industry. More clarity, regulation and education can help provide investor protection, especially with the increased popularity of celebrity endorsements and the release of new stablecoins and altcoins (ie events like the Terra crash). Regulations can also help increase market stability, provide guidance for companies to innovate new products, and attract institutional investors who currently face regulatory hurdles or are still waiting on the sidelines.
Currently, only a few bills affecting digital assets have actually become law, including the Infrastructure Investment and Jobs Act, which provides some guidelines for crypto tax reporting requirements. But the majority of crypto-related bills have only been introduced and have yet to be finalized.(1) While regulatory attention is a significant step, these bills must be passed before they have a real impact on the industry. These are some of the bills in the pipeline:
Digital Taxonomy Act (HR 3638)
- Introduced 28 May 2021
- Directs the Federal Trade Commission (FTC) to submit to Congress a report on the FTC’s actions related to digital tokens, including addressing unfair or deceptive trade practices.
Digital Asset Market Structure and Investment Protection Act (HR 4741)
- Introduced July 28, 2021
- Provides regulation for digital assets. Gives the Commodities Futures Trading Commission (CFTC) authority over digital assets and gives the Securities and Exchange Commission (SEC) authority over digital assets.
Digital Commodity Exchange Act (HR 7614)
- Introduced April 28, 2022
- Ensures orderly and secure digital commodity exchange markets, including conditions for the sale of digital commodities and registration of exchanges.
Lummis-Gillibrand Responsible Financial Innovation Act (S. 4356)
- Introduced June 7, 2022
- Ensuring responsible financial innovation and bringing digital assets into regulatory view.
Digital Commodities Consumer Protection Act of 2022 (HR 8950)
- Introduced on September 22, 2022
- Amends the Commodity Exchange Act to give the Commodities Futures Trading Commission (CFTC) jurisdiction to oversee the digital commodity market.
Bottom line:
Because the crypto/digital asset market is still in its early stages, regulation is seen as positive for the industry and could stimulate further retail and institutional investor interest. There are more and more bills being introduced in Congress, but most of these have not yet materialized.
The Alerian Galaxy Global Cryptocurrency-Focused Blockchain Equity, Trusts and ETPs Index (CRYPTO) is the underlying index of the Invesco Alerian Galaxy Crypto Economy ETF (SATO).
The Alerian Galaxy Global Blockchain Equity, Trusts and ETPs Index (BCHAIN) is the underlying index of the Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC).
Related research:
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(1) All information from www.congress.gov
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