Digital Innovation Act Passed by Congress, Taking a Step Towards Efficient Regulation

On Tuesday, April 20, 2021, the house passed six bipartisan Financial Services bills, including Ranking Member Rep. Patrick McHenry’s (R.N.C.) proposed Eliminate Barriers to Innovation Act. This bill aims to improve crypto-regulation efficiency, as well as promote innovation in the sector in the U.S.

Wilfred Victor
April 29, 2021
Blockchain News

The Eliminate Barriers to Innovation Act

For the better part of several years since the origination of Bitcoin in 2009 to the emergence of the technology as a top global technological asset, the legal framework of the cryptocurrency sector in the U.S hasn’t been clear for a lot of reasons. One main issue has been the overlapping role of both the finance ‘police’ Security and Exchange Commission (SEC) and the Commodity Future Trading Commission (CTFC). This unregulated space seems to be progressing in the right direction with the introduction of Rep. McHenry’s proposed legislation.

Introducing the Bill

Ranking Member Reps. Patrick McHenry’s Eliminate Barriers to Innovation Act

Both Reps. Patrick McHenry (R-N.C.) and Stephen Lynch (D-Mass.) introduced legislation last week Tuesday with three other co-sponsor of the bill, including Glenn Thompson (R-Pa.), Ted Budd (R-N.C.) and Warren Davidson (R-Ohio) to create a working group composed of trade consultants, experts, and representatives from the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), including private market players to appraise the current regulatory framework around digital assets and cryptocurrencies in the United States.

The bill will assist in opening dialogue between the market participants, industry players, the SEC, and the CTFC. According to Rep. McHenry, there is a need to clarify the legal framework around cryptocurrencies and digital assets that will enable the U.S to gain from the technology - a two trillion dollar industry - eliminating the barriers of innovation. The bill seeks to protect the investing community and not allow the debates of the CTFC and SEC to crush the sector. The CTFC purportedly sees everything as ‘Fish’ and the SEC sees it as ‘Foul’, and, according to McHenry, cryptocurrency is technology which is neither a ‘Fish’ nor a ‘Foul’. McHenry recognizes that decentralized cryptocurrency requires a smart regulatory framework that allows for growth.

Details of Expected Events

Under the bill’s terms, Congress will create a working group within 90 days of the bill passage composed of the SEC, CTFC, and the private sector. Private sector representatives would come from a financial technology company, a financial services institution, small businesses using financial technology/cryptocurrencies, investor protection groups, organizations that support investments in underserved businesses, and at least one academic researcher. 

Within a year, this group will be required to file a report analyzing the current regulations and its impact on primary and secondary markets and how they impact the US competitive position in the overall market. The report will look at how custody, private key management, and cybersecurity are currently viewed under the law fraud protection and what future best practices can be adopted to help protect the investing community. The report will include suggestions for improving the primary and secondary digital asset markets, including their fairness, orderliness, integrity, efficiency, transparency, availability, and efficacy.

According to this correspondence between Coindesk and Amy Davine Kim, chief policy officer at the Chamber of Digital Commerce, the legislature aims to establish a clear and comprehensive framework for digital assets in the United States.

In her words; 

The bill brings together both the SEC and CFTC in a formal way, to work through some of the key issues that have impacted legal clarity in the space for years - Now we have an opportunity to start methodically addressing them with many stakeholders.”

Crypto Twitter (CT) Reaction

The bill was Tweeted by the Financial Service GOP Twitter handle:

Following the tweet, the bill was met with overwhelming support from CT users, with only small complaints about the length of time that parts of the bill will take to enact fully. The bill begins a significant aspect of a clear legal framework for the US market that is considered among the biggest markets in the world, along with other top economies like China. 

The Five Other Bipartisan Bills Presented

The bill will bring about cohesion and clarity between the role of the SEC and CTFC members, where the legal jurisprudence of one ends and where the other begins. The focus will become encouraging more innovative use of the blockchain community, as well as protection of investors by making safer cyberspace and fraud prevention systems.

Final Thoughts

Overall, the framework will help identify how the United States can benefit from the legitimate income generated and stay ahead of the competitive curve. There is a severe lack of regulatory measures in the crypto world, which has both provided freedom to users as well as increasing risk potential. With the support of the government, cryptocurrency seems to be improving its safety measures and becoming a fully-accepted form of currency.

Wilfred Victor

Ace finds himself as a blockchain enthusiast who is focused on growing with the entire crypto sector. He is an energetic and passionate writer who believes that all things are achievable.