Bitcoin (BTC), Ethereum (ETH), and other top-ranking cryptocurrencies, such as Ripple’s XRP (XRP) and Binance’s BNB (BNB), have seen significant growth this year, increasing the overall crypto market value by $350 billion in 2023.
Despite experiencing a dip from its 2023 peak of over $30,000, which also influenced the value of Ethereum, XRP, and BNB, the actions of companies like Goldman Sachs and Microsoft suggest a potential upcoming bull run.
Now, amidst speculations of a looming crypto “powder keg”, U.S. legislators have suggested a “functional framework” aimed at providing regulatory clarity for Bitcoin and crypto-based companies in the country.
This initiative comes in a 162-page draft bill, presented by House financial services committee chair Patrick McHenry, and House agriculture committee chair Glenn Thompson, both Republicans. The bill aims to initiate bipartisan discussions on crypto regulation, according to Bloomberg.
In recent times, major U.S. Bitcoin and cryptocurrency companies have expressed concerns over the nation’s lagging stance on crypto regulation compared to other parts of the world.
This worry is even more pronounced with the new crypto regulatory measures in Hong Kong and the European Union’s landmark Markets in Crypto Assets (MiCA) regulation.
The conflict has been rife between major crypto exchanges, such as Nasdaq-listed Coinbase, and regulators, over the issue of certain cryptocurrencies being sold and traded as unregistered securities.
In late 2020, the U.S. Securities and Exchange Commission (SEC) sued Ripple, alleging the sale of $1.3 billion in unregistered securities via its XRP cryptocurrency.
The newly proposed U.S. crypto bill sets forth that cryptocurrencies offered as part of an investment contract would fall under SEC jurisdiction, while those qualifying as commodities would be regulated by the Commodity Futures Trading Commission (CFTC).
The determination of whether cryptocurrencies, like Bitcoin, Ethereum, Binance’s BNB, or Ripple’s XRP, are securities or commodities would hinge on the level of decentralization of their underlying blockchain, subject to an SEC ruling.
Reactions to the bill in the Bitcoin and crypto community are largely positive ahead of a House agriculture committee hearing on digital asset regulation scheduled for June 6.
The chief legal officer at Bitcoin and crypto exchange Coinbase, Paul Grewal, praised the bill’s solid foundation for regulatory jurisdiction and definitions on Twitter.
Overall, the draft legislation is considered an encouraging step forward after the crypto setbacks of the previous year, as stated by Ryan Selkis, founder of crypto data company Messari. However, Selkis pointed out that there is much work to be done to craft a viable piece of legislation but deemed the bill a good starting point for a sensible market structure bill.