HFSC Chairman Says Bill Will Provide Digital Asset Regulatory Framework

A bill now in the U.S. House of Representatives would make it law that not all digital assets are securities.

So said House Financial Services Committee (HFSC) Chairman Patrick McHenry in opening remarks made Wednesday (July 26) ahead of a markup of the “Financial Innovation and Technology [FIT] for the 21st Century Act.”

“Our comprehensive digital asset market structure legislation recognizes a key issue: Digital assets that are not inherently securities may be offered as part of an investment contract but that does not make them securities,” McHenry said in the opening remarks.

“To clarify how the Supreme Court’s Howey Test applies to digital assets, our bill focuses on two key issues — decentralization and functionality,” McHenry added. “That is the crux of the FIT for the 21st Century Act, the pairing of those two factors.”

In the Howey Test, the U.S. Supreme Court defined a security as having four parts: an investment of money; in a common enterprise; with expectations of a profit; and to be derived from the efforts of others.

The legislation being discussed Wednesday in the House also includes “robust” consumer protections that members of both parties have called for, McHenry said in his opening remarks.

“At its core, this bill ensures everyday investors are not left with less protection than institutional investors,” McHenry said.

Overall, the legislation is meant to provide governmental clarity for digital assets, time-tested consumer protections and a regulatory environment that allows the technology to flourish in the United States, McHenry said.

“As other jurisdictions like the U.K., the EU, Singapore and Australia move forward with clear regulatory frameworks for digital assets, the United States is at risk of falling behind,” McHenry said. “Today, this committee is taking the first step to fix this.”

As PYMNTS reported Wednesday morning, the cryptocurrency industry has long been asking Washington for more regulatory clarity, and this week could finally put the sector on the road to that goal.

The debate marks the first time such crypto regulations will be voted on by Congress.

The post HFSC Chairman Says Bill Will Provide Digital Asset Regulatory Framework first appeared on PYMNTS.com.