The US is introducing a new bill called the ‘Cryptocurrency Act of 2020‘ which aims to provide a new general regulatory framework for digital assets such as cryptocurrencies.
More specifically, the Cryptocurrency Act of 2020 would be the new document clarifying which federal agencies can regulate the crypto world in the US so that they can then communicate the issuance of licenses, certifications or the necessary federal requirements to create or exchange all digital assets.
The draft document currently contains some points that may already show the initial direction taken by Congress.
The new ‘Federal Crypto Regulator’ entities
The entities referred to as the new ‘Federal Crypto Regulator’ should be:
- the Commodity Futures Trading Commission (CFTC),
- the Securities and Exchange Commission (SEC),
- the Financial Crimes Enforcement Network (FinCEN).
In addition, each of these three agencies will have specific expertise: the CFTC in the crypto-commodity area, the SEC with crypto-securities and the FinCEN with crypto-currencies.
The draft also includes a series of definitions to delimit the categories belonging to the crypto world and therefore the powers of the chosen government bodies.
Crypto-commodity, for example, defines those economic goods or services that have a total or substantial fungibility, which the markets deal with regardless of who produced those goods or services, and which are based on a decentralised blockchain or cryptographic ledger.
Crypto-currency, on the other hand, is defined as follows:
Crypto-currency is defined as representations of United States currency or synthetic derivatives resting on a blockchain or decentralized cryptographic ledger. The types that are included in this definition are:
- such representations or synthetic derivatives that are reserve-backed digital assets that are fully collateralized in a correspondent banking account, such as stablecoins.
- synthetic derivatives that are determined by decentralized oracles or smart contracts; and collateralized by crypto-commodities, other crypto-currencies, or crypto-securities.
Crypto-securities, on the other hand, are debt, equity and derivatives based on a decentralised blockchain or cryptographic ledger, with one exception
The stablecoins listed in the Cryptocurrency act of 2020
Even stablecoins are defined in the new US legislative document, divided into two categories: reserve-backed stablecoins and synthetic stablecoins.
Reserve-backed stablecoins are a representation of currency issued by the United States or a foreign government that rests on a blockchain or a decentralised cryptographic ledger and is fully backed by that currency on a one-to-one basis and fully collateralised in a corresponding bank account.
Synthetic stablecoins, on the other hand, are like a digital asset stabilised with respect to the value of a currency or other asset that also rests on a decentralised blockchain or cryptographic ledger.
This new policy could in fact also resolve disputes over the regulation of stablecoins.
In fact, in October 2019, there was a bill on this issue, the “Stablecoins are Securities Act of 2019“, which was officially introduced precisely because of the need to find a solution to include the Facebook stablecoin project within the legal framework, and effectively to control its possible impact on monetary policies.