- The US HFSC is reportedly working to introduce regulatory clarity in the crypto industry following years of campaigns.
- The committee is also coming up with a new digital asset market structure legislation to challenge the Howey Test.
The United States has over the past few years faced a series of criticisms for its legal actions against crypto-related companies and some digital assets. Many industry key players have consistently called for clarity in these regulations as other countries displace the US from the pole position of crypto-friendly countries to attract industry powerhouses.
In response to this, the United States has introduced a new bill to address these challenges and also questions the Howey test. This lines the country up to take over the apex position of the most crypto-friendliest country.
According to reports, the US House Financial Services Committee (HFSC) in collaboration with the House Financial Services and Agriculture Committees on July 26 proposed the “FIT for the 21st Century Act,” to establish clear rules for the digital asset industry.
Chairman Patrick McHenry was cited:
The FIT for the 21st Century Act is a historic first step towards achieving legislative clarity for digital assets, providing robust, time-tested consumer protections, and facilitating a regulatory environment that allows this technology to flourish in the United States.
According to reports, the ACT is meant to establish a conventional financial system built on decentralized transactions. In the past few months, the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) have been called out for applying laws that exist in traditional markets to emerging technologies.
The law enforcement actions by these regulators questioned the country’s claim as the global leader in technology innovation, invention, and adoption. The likes of the UK, EU, Singapore, and Australia are said to have gone ahead of the US in this regard. Interestingly, the proposed ACT is expected to restore its position.
The Howey Test in the Face of Crypto Regulation
As other jurisdictions like the UK, the EU, Singapore, and Australia move forward with clear regulatory frameworks for digital assets, the United States is at risk of falling behind. Today, this Committee is taking the first step to fix this.
The committee has also established a new digital asset market structure legislation to challenge the statutes of the Howey Test. This is the yardstick an investment must meet to be classified as a security and be regulated by the SEC. With the new legislation, it is said that:
Digital assets, not inherently securities, may be offered as part of an investment contract, but that does not make them securities.
Decentralization and Functionality are the two key issues that the bill focuses on. According to McHenry, the bill is a product of years of consultations, and lessons from the collapse of the Sam Bankman-Fried’s crypto empire, FTX. In addition, the team also took lessons from the six digital asset hearings held in 2023. According to reports, it takes into consideration the call for “much-needed legal clarity and certainty for the digital asset ecosystem.”
Ripple CEO Brad Garlinghouse is one of the leading key players in the crypto industry who has on several occasions called for regulatory clarity.
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