US Congressman Proposes Legislation to Regulate Digital Asset Market

US Congressman Don Meyer has introduced sweeping legislation to regulate the digital asset market on Wednesday. The bill titled the “Digital Asset Market Structure and Investor Protection Act”, seeks to enhance consumer protection while fostering innovation in the crypto industry. If approved, the new legal framework would grant CFTC the power to regulate crypto-assets and enable the Treasury Department to prohibit certain fiat-based stablecoins.

US Congressman Introduces Bill to Regulate Digital Assets

According to Beyer, digital assets hold great promise for the future, however, the market’s current structure and lack of regulatory oversight make them risky for investors. “Digital asset holders have been subjected to rampant fraud, theft, and market manipulation for years,” he said.

He added that his proposal would kickstart the “long overdue process” of updating the existing laws to provide “basic protection” to cryptocurrency owners and investors.

Beyer estimates that there are 11,000 cryptocurrencies with a combined market cap of over $1.5 trillion and that 20-46 million average Americans currently possess Bitcoin or another digital asset. He points out that many of these regular investors have been targeted by fraudulent schemes, trading platform hacks, manipulation, and theft. 

To address these pain points, Beyer suggests that digital asset securities should be monitored by the Securities and Exchange Commission (SEC),  and the tokens should be governed by Commodity Futures Trading Commission (CFTC). Furthermore, he wants the Federal Reserve to have “explicit authority” to issue the digital dollar and to clarify that dollar-pegged stable currencies are not legal tender in the US. The legislation also lists several other measures that prevent the use of crypto-assets in money laundering and other illegal activities.

The Necessity for Regulation in Crypto Market

Beyer isn’t the first legislator to demand regulation of the crypto industry. Many lawmakers have pointed fingers at crypto’s role in the recent uptick in ransomware attacks and the use of digital assets in facilitating illicit acts. The Colonial Pipeline incident is still fresh in the memories of many regulators. Beyer’s legislation also took note of the attack that cut oil supply to a part of the country for several days.

“In May 2021, the Colonial Pipeline, which provides gasoline to much of the eastern United States, had its computer system hacked and was forced to pay a $4.4 million ransom in Bitcoin, which is the preferred currency for ransomware attacks,” the legislation reads.

Democratic senator Elizabeth Warren has also voiced her support for crypto regulation on several occasions. Just two days ago, she told the CNBC network that legislators shouldn’t wait for smaller investors and traders to be wiped out before taking action.

Clearly, regulation is the need of the hour. However, the extent and robustness of any proposed framework could change the course of the market for better or for worse.