Unexpectedly, House Democratic leaders revealed their stance on the House Republican crypto bill. Despite expressing their strong opposition to the bill, Representatives Maxine Waters and David Scott chose not to encourage other legislators to vote against it actively. This action marks a critical turning point in the legislative process. It sets the stage for the upcoming parliamentary discussions and voting on Wednesday.
The proposed crypto bill’s effect on regulatory norms
Digital assets have historically been subject to SEC regulation as securities, determined by applying the “Howey” test. According to this test, an “investment contract” is any financial commitment made to a joint venture with a realistic expectation of earnings. But the language in the recently proposed measure goes against this norm.
The new law disrupts established legal norms, fundamentally altering the status of digital assets in the securities market. Moreover, it introduces a process allowing digital commodities initially deemed securities to be traded in secondary markets. However, this provision undermines investor protections by providing a safe harbor for companies filing an “intent to register.” Consequently, this opens the door to potential manipulation and fraud within the markets.
Democratic Apprehensions and Current Measures Concerning the Regulation of Cryptocurrencies
Democratic leaders are dubious about the plan, even if they have refrained from organizing a formal opposition. Members were asked to respond to a whip question that highlighted Waters and Scott’s vehement opposition without specifically calling for a “no” vote. Waters intends to meet with SEC representatives to discuss concerns in more detail, demonstrating continuous efforts to resolve regulatory ramifications.
Waters and Scott warned colleagues about risks of no primary regulator and repercussions of loosening regulation under the CFTC. This proactive involvement demonstrates the Democrats’ dedication to providing strong supervision and defense in the dynamic domain of cryptocurrency regulation.
