New US senator's bill would shield crypto exchanges from SEC enforcement

By: Michael Wilson

October 1, 2022 8:50 AM

The purpose of the Digital Trading Clarity Act of 2022 is to clarify how existing securities laws treat digital assets and the liabilities associated with trading them.

Legislation seeking a safe harbor for cryptocurrency exchanges from "certain" Securities and Exchange Commission (SEC) enforcement actions was introduced by United States Senator Bill Hagerty, a member of the Senate Banking Committee.

Sen. Hagerty has introduced the Digital Trading Clarity Act of 2022 in an effort to clarify regulatory uncertainty regarding I the classification of digital assets and (ii) related liabilities under existing securities laws, both of which have been identified as major obstacles for the establishment of crypto exchanges.

Proposed legislation to create a safe harbor for digital asset intermediaries from SEC enforcement actions, and for other purposes. The information comes from congress.gov.

Sen. Hagerty provided a high-level summary of the issues in the face of regulatory roadblocks:

"The current lack of regulatory clarity for digital assets forces entrepreneurs and businesses to choose between navigating significant regulatory ambiguity in the United States and expanding into markets with clear digital asset regulations."

According to Senator Hagerty, investment in the crypto spaces is discouraged due to the aforementioned regulatory uncertainty, which in turn hinders opportunities to create jobs in the United States. Consequently, the blockade "threatens U.S. leadership in this transformative technology at such a crucial time."

If the bill were to pass, the senator said, it would boost the development and liquidity of U.S. cryptocurrency markets and provide "much-needed certainty" to the crypto industry.

The bill needs the support of the Senate, the House of Representatives, and the President of the United States in order to become law.

The federal government has stepped up its research into the viability of central bank digital currencies (CBDCs) in the American market in tandem with the regulatory reforms recommended by US senators.

In response to Biden's request, the Office of Science and Technology Policy (OSTP) compared and contrasted 18 different CBDC design options, outlining the benefits and drawbacks of each.

"It's possible that advancements in the technology supporting a permissionless approach will make it more amenable to use in a CBDC system down the road."

This department's preference for an off-ledger, hardware-protected system was highlighted in the technical evaluation for a U.S. CBDC system.