A Republican Senator recently proposed a new bill to safeguard crypto exchanges from regulatory overreach, the latest attempt by the US Senator as concerns grow that the U.S. Securities and Exchange Commission (SEC) appears to overstep the border.
The bill, called the Digital Clarity Act of 2022, and introduced by Bill Hagerty of Tennessee, would act as a safeguard against regulatory overreach in crypto exchange platforms and clear up regulations regarding virtual assets.
At Least Someone Has The Right Idea
The growth of cryptocurrency has been particularly remarkable over the last decades. It is shown not only in the greater number of participants but also in the growing interest of large institutions.
As a result, the number of crypto exchanges has surged rapidly to the extent where problems start arising.
As the activities that relate to digital assets and crypto exchanges raise a number of significant issues, authorities call for an urgent legal framework to regulate the sector.
Numerous bill proposals have come onto the scene but SEC’s made the biggest concern due to its notorious stance against crypto. On top of that, the current lack of regulatory certainty has driven away digital asset investment in America.
This status quo, as Haggerty outlined in the press release, pushes entrepreneurs and businesses to seek other markets with regulatory clarity for digital assets, rather than navigating, “the significant regulatory ambiguity in the US.”
The investors have less opportunity to stay in for long-term growth and once they shift operations, the rate of job creation likely decreases. The regulatory ambiguity poses a serious threat to the industry’s growth in the US.
“This legislation is an important step toward providing digital asset intermediaries with much-needed certainty and removing the barriers to entry currently impeding the growth and liquidity of US cryptocurrency markets,” said the senator.
The proposal to safeguard cryptocurrency exchanges did not specify which SEC enforcement actions would be shielded.
This is the second bill that Hagerty has proposed this year; the first was the Stablecoin Transparency Act, which aims to define which crypto assets qualify as stablecoins and how they are backed.
Regulatory Needs And Challenges
The year’s central theme must be the demand that cryptocurrency use is governed by relevant regulations. Despite the industry’s explosive growth, regulation of cryptocurrencies remains a challenge, particularly in the US.
However, the absence of cohesive regulation is not the result of a lack of will on the part of the authorities.
The problem with the development of supervision and regulation is actually the quick advancement of technology surrounding cryptocurrencies, which creates challenges for authorities to keep up with the evolution.
Cryptocurrency is very complex with many aspects that need to be carefully studied to define it accurately in the legal framework.
People will also see the failure of a number of crypto exchange platforms during this year. The vast majority of these financial institutions are governed by a minuscule amount, if any at all, of regulatory oversight.
While these platforms resemble traditional banks but are blockchain-based, this business model is unsustainable due to the absence of oversight or regulation over their operations.
This approach has issues whenever the market displays signals of unpredictability, and it is evident that some platforms do not have sufficient deposits to enable consumer withdrawals.
The failure of these platforms serves as a caution that rules are necessary before institutional players can make significant inroads into the digital asset market.
While linked transactions are growing, there are presently no laws that control cryptocurrencies or recognize their legality. As a result, authorities are finding it difficult to handle tax collection, court enforcement, criminal prosecution for crypto-related conduct, etc.
Therefore, it is imperative to establish a clear and transparent procedure as soon as possible that is based on national experience.
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