The encryption legislation can liberate the SEC supervision industry – but critics warn that it is the Pandora Fund

As bills related to encryption via Congress with the ambitious goal of passing by August, the possible effects of this legislation began only to crystallize.

For example, one of this bill will seek to amend the laws of US constitutive papers to spread most of the encryption assets from the definition of “security” – a bold step with a few precedents in the history of Congress, at least since I wrote these laws for the first time at the beginning of the new deal in the thirties of the twentieth century.

The draft law, which was called the Securities Clarity Law, was re-submitted at home last week by the majority of the house Tom Amir (R-Mn), a famous supporter. Tell EMMER recently Decipher It intends to be brought up in the draft law on the encryption market structure, known as Fit21 – its passage has been considered a top priority by the leadership of Congress and the White House.

A copy of Fit21 already Pass The house with the support of the two parties last year. But EMMER and other Republicans believe that the encryption industry and its allies can now press for a more useful regulatory framework, and they want to reformulate the draft law.

“The draft law collected by Patrick McGanrey was a great invoice, and I was proud of his support,” Emeer said. Decipher Last week, referring to the Chairman of the previous Financial Services Committee. “But let’s face it: there is a new administration. There is a new position on the encryption community and digital assets.”

SEC out of encryption

One of the main privileges that Emmer wants to extract from this right moment is to eliminate the authority of appreciation for federal agencies to determine the assets of encryption are securities, and which is not. Last year, the Fit21 version of SEC and CFTC were working together to create a new framework to assess the security status of digital assets.

But the clarity of securities would avoid this process by returning and amending the major securities laws, including the 1933 Constituent Securities Law and the 1934 securities exchange law, to exempt Blockchain’s codes explicitly from the regulation of securities.

This means distinctive symbols such as Ethereum, Solana, Cardano and XRP, and perhaps thousands of others – which, until very recently, were the subject of SEC enforcement procedures – formally exempt from supervision of SEC.

“With Fit21 we had to make some concessions, where you will determine the Supreme Education Council whether you are safe or not,” “I love the law of clarity of securities because it takes this estimate from the system. This is what we will fight to add.”

Some experts say that this step will cause ripples that are far exceeding encryption – and can be involved in the basis for the regulation of securities that have supported the US economy since the new deal.

The draft law, among other matters, will amend a major paragraph in the Securities Law of 1933, which determines “security”; Although this language has been changed before through legislation, these amendments usually expand the definition of securities to keep pace with new financial products. They seem to have never done so restricted Definition of security.

Simply: This is the main paragraph of the distinctive securities law in America currently does not stipulate that any kind of assets no security. The law of clarity of securities will change this.

Transferring the Securities Law “on his head”

Corey Frayer, Director of Investor Protection at the Consumer Union in America, believes that the creation of such an exemption can eventually weaken current securities regulations not only for encryption, but for other non -naked markets.

Frayer – who was previously working as a great consultant in the encryption policy to former SEC president Gary Gensler – insists that if the legisists add explicitly to the legal definition of America, they will create an actual shortcut to other industries to circumvent securities regulation.

Frayer said this can be accomplished, by bringing assets outside the chain on the chain to enjoy the same protection as Crypto, or by arguing in the court that a non -CRYPTO financial product has sufficient similarities with an exempted encryption now, and that he must receive the same legal treatment. In other words, Tesla can create, in theory, a symbolic version of its stock and then argues that the trading of these assets should be exempt from checking in the SEC.

“The best scenario is that the traditional markets are all transferred to the markets of the least -organized encryption assets as proposed in the bill,” said Frayer. “In the worst scenario, all markets of securities are brought … to the same system that has been liberated, undermining 90 years of security and regulation law.”

Supporters of the draft law insist that they do not change the laws of US stocks – only explain them. For years under Biden administration, they say, the Supreme Education Council tried to destroy the encryption industry Inaccurately In claiming that the assets of the chain were Naturally Unlabless securities. This draft law would prevent such a scenario by clarifying that the distinctive symbols on the chain and rosary with the possibility of transferring to a counterpart that is not, by nature, securities.

The new legislation also includes a condition that shows that any of the chain assets meets the definition of the origin previously announced by the 1933 law to be safe-or stocks or bonds-is still safe. Tell a source familiar with the creation of the bill Decipher This item was exactly added to prevent legislation from the involvement of any current securities regulations related to non -digital assets. This means that Tesla and the other companies circulating in public will work no Be able to circumvent the current securities by simply converting to encryption.

Frayer, though, does not buy the argument. And it confirms that the regulation of securities has relied on decades on the comprehensive discretionary power of organizers to determine whether any specific assets are safe or not, with the help of tools such as the Supreme Court Amateur exam.

Frayer said that it was always clear, why the United States government has never relied on only black lines to determine the assets that were securities, which were not – because it would be very easy to “the game of these lines” by creating new financial tools such as inventory, for example, but it has one or two features that made it features that make them features or two of the features that made it made it not quite Stock, thus escape from the organization.

Frayer said that the clarity of securities will prevent this operating procedure for decades “on his head.”

“This is where the dragon is located.”

Other legal experts differ. Drew Hinkes, partner at Winston & Strawn, who specializes in digital assets and securities regulation, views the bill more limited in its potential impact. As it sees it, the legislation will simply explain that digital assets are not automatically, by nature, securities – its point of view subscriber By judges who have presided over SEC cases related to encryption in recent years.

“This seems to crystallize the opinion that the courts have taken in Telegram and Ripple that the symbols that are sold in an investment contract are also not automatic custodians,” DecipherThe reference is the rulings in the SEC lawsuits against the two companies.

This interpretation is more gels with the declared goal of the clarity of securities, and it will continue to allow the theoretical reality of distinctive securities or other products on the series that is still organized by the Supreme Education Council.

But Hinkes admits that determining the types of assets on the chain that should be considered symbolic securities, which should not, should not, many mysterious questions that have not yet been tested in the American legal system, including whether symbols can carry legal rights.

“The law on this point is unclear and will benefit from some developments,” he said.

One of the legal experts familiar with the draft law has placed frankly when discussing a previous few existing to determine the type of assets that will constitute a symbolic security.

And they said: “This is the part in which the limits of the map become mysterious and say:” This is the place where the dragon is located. ”

The clarity of securities is just one part of the ongoing multi -side voltage in Washington to legalize the coding industry officially and integrate it with traditional financing. Since this process is pushing forward Breakneck quickly, some organizers have expressed concern that it may risk permanently damage to the wider US financial system.

Last month, at the first round of coding in the Securities and Stock Exchange, the Commissioner Caroline Krinko urged the attendees – and its authorized colleagues – urged caution because they are Re -Equipment existing an agency Policies To take advantage of the digital asset industry.

Crenshaw, the only remaining democratic in the committee, has become really unable to change the committee’s direction of encryption. She was supportive of former SEC President Gary Ginsner Judicial cases Against many encryption companies, the re -configuration of the agency was very strong protest Through the industry in December, Democrats of the Senate eventually voted on the matter.

Before the CEO of CEOs and Lawyers in Chefir in late March, Krinko argued, sometimes declining voice, that the industry project shares could not be higher – was wandering in the basic organizational structure that prompted the entire American economy of $ 120 trillion since the 1930s.

“On the basis of this structure is the definition of security,” said Crenshaw. “We cannot put holes in the institution without expecting the walls to crack.”