House of Representatives Crypto Bill: Definition of Digital Assets Clarified, Regulatory Gaps to Be Filled

Source: Blockchain Knight

On May 5th, leaders of the U.S. House Financial Services Committee and the Agriculture Committee released a discussion draft outlining a federal framework for regulating the U.S. Crypto asset industry.

The Chairman of the House Financial Services Committee, French Hill (Republican, from Arkansas), the Chairman of the Agriculture Committee, Glenn “G.T.” Thompson (Republican, from Pennsylvania), the Chairman of the Digital Assets Subcommittee of the Financial Services Committee, Bryan Steil (Republican, from Wisconsin), and the Chairman of the Commodity Markets Subcommittee of the Agriculture Committee, Dusty Johnson (Republican, from South Dakota), jointly released the legislative draft.

These lawmakers emphasized that the bill aims to coordinate the regulatory responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC), while also providing legal definitions for key terms in the Blockchain and Crypto asset markets.

Chairman Hill stated: “This discussion draft further develops on the progress made by both parties and both chambers in the 118th Congress, providing a lasting framework for protecting consumers and maintaining America’s leadership in digital innovation.”

He also added that the committee intends to incorporate public feedback and collaborate with the Donald Trump administration to promote the enactment of the final bill.

Digital Asset Classification

This legislation introduces definitions for core industry concepts, including digital goods, Blockchain systems, decentralized governance, approved payment stablecoins, and mature Blockchain systems.

In addition, the draft also specifies that distributions made through Mining, staking, or user rewards, referred to as “end-user distribution,” do not fall under securities nor constitute a sale under current law.

Chairman Thompson emphasized the urgency of clear legislation, pointing out that the proposed framework will fill regulatory gaps and provide developers and users with the certainty they have long been calling for.

The draft sets out a registration pathway for digital commodity exchanges, brokers, and dealers under CFTC regulation, while allowing the SEC to retain jurisdiction over securities and certain mixed assets. Entities engaged in custodial functions, trade facilitation, or interacting with customers must follow the newly defined registration and disclosure procedures.

Committee Chairman Steil stated: “This is the beginning of the golden age of digital assets, and the House is leading this trend.”

Johnson agreed with this view, stating that the United States must provide a reasonable regulatory framework to maintain its position as a global center for Crypto asset investment and innovation.

The draft also retains protections for DeFi protocols and self-custody. It stipulates that as long as DeFi trading protocols and messaging systems do not custody user funds or exercise discretion, there is no need to comply with traditional financial regulations.

The bill also prohibits the Treasury Department or the Financial Crimes Enforcement Network (FinCEN) from issuing rules that restrict individuals’ ability to self-custody Crypto assets through wallets.

Launch the Legislative Process

The committee has scheduled a joint hearing on May 6, titled “The Future of American Innovation and Digital Assets: A Blueprint for the 21st Century,” aimed at initiating formal legislative discussions and gathering feedback from stakeholders.

The draft includes provisions on the joint formulation of rules by the SEC and CFTC, as well as conducting research on DeFi, NFTs, and Blockchain infrastructure by expanding the functions of the innovation offices of federal agencies.

The proposed bill aims to eliminate uncertainty in the regulation of crypto assets in the United States by establishing legal definitions and clear jurisdictional boundaries, while encouraging responsible development and regulation of the digital asset market.