U.S. House Republicans Officially Introduce Crypto Market Structure Bill

The House of Representatives has introduced the Digital Asset Market Clarity Act, a comprehensive bill aiming to establish a regulatory framework for digital asset markets. This 236-page bill, a successor to the previous session’s FIT21 Act, is spearheaded by leading Republicans from the House Financial Services and Agriculture committees. While stablecoin legislation remains a priority, the Clarity Act tackles the more complex issue of overall market structure.

Representative Dusty Johnson emphasizes the need for clear regulations to establish the U.S. as a global leader in digital assets. The bill grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over digital commodity spot markets conducted through registered entities. Crypto platforms will have the option to register with either the CFTC or the Securities and Exchange Commission (SEC), depending on whether they trade digital commodities or securities. Provisional registrations will be available while the agencies finalize rules.

The act mandates that crypto platforms comply with the Bank Secrecy Act, exempts certain decentralized finance (DeFi) operations and wallet providers from SEC oversight, and prohibits regulators from forcing custody firms to hold customer assets on their balance sheets. Payment stablecoins, explicitly defined as non-securities, will fall under the jurisdiction of the regulator overseeing the involved firm.

The bill also addresses “qualified digital asset custodians,” establishing standards for adequate supervision and regulation by federal, state, or foreign authorities. The CFTC will define these standards. DeFi regulation is deferred, with the SEC, CFTC, and Treasury Department tasked with producing a report within a year on how to proceed. The Government Accountability Office will also provide reports on DeFi and non-fungible tokens (NFTs).

If enacted, the involved regulators will have one year to implement the Clarity Act’s market structure rules. This timeframe aligns with similar legislation, although complexities may lead to delays. The Senate will continue its debate on a separate stablecoin bill, with uncertainty remaining about whether the House and Senate versions will align. While both bills are desired by the President by the August congressional recess, this is considered ambitious. Upcoming hearings will allow for public discussion of the bill’s details.