The U.S. Congress has proposed a draft framework for the regulation of encryption assets to protect innovation and clarify regulatory boundaries.

The U.S. Congress recently unveiled an important legislative draft aimed at establishing a comprehensive regulatory framework for the domestic encryption asset industry. This discussion draft, jointly proposed by the leaders of the House Financial Services Committee and the Agriculture Committee, seeks to coordinate the regulatory responsibilities of the SEC( and the CFTC), and provide clear definitions for key terms in the Blockchain and encryption asset markets.

Lawmakers emphasized that the main goal of the draft is to protect consumer rights while ensuring the United States maintains its leading position in the field of digital innovation. They plan to widely solicit public opinion and work closely with the government to promote the promulgation and implementation of the final bill.

This legislation introduces definitions for several core concepts, including digital goods, Blockchain systems, decentralized governance, approved payment stablecoins, and mature Blockchain systems. Notably, the draft explicitly states that distributions made through mining, staking, or user rewards do not fall under securities and do not constitute a sale.

The draft establishes a registration pathway for digital commodity exchanges, brokers, and dealers under CFTC regulation, while retaining SEC jurisdiction over securities and certain hybrid assets. Entities engaged in custody, trade facilitation, or customer interaction will need to follow new registration and disclosure procedures.

Lawmakers stated that this initiative marks the beginning of a new era for digital assets, and the United States must establish a reasonable regulatory framework to maintain its position as a global center for cryptocurrency investment and innovation.

It is worth mentioning that the draft retains protections for decentralized finance ( DeFi ) protocols and self-custody. As long as DeFi trading protocols and messaging systems do not hold user funds or exercise discretion, there is no need to comply with traditional financial regulations. Furthermore, the draft also prohibits relevant authorities from restricting individuals' ability to self-custody encryption assets through wallets.

To promote the legislative process, the committee has scheduled a hearing on the theme "The Future of American Innovation and Digital Assets: A Blueprint for the 21st Century." This will initiate formal legislative discussions and gather opinions from various parties.

The draft also includes provisions for the SEC and CFTC to jointly formulate rules, as well as plans to conduct research on DeFi, NFTs, and Blockchain infrastructure by expanding the functions of the federal agencies' innovation offices.

Overall, the proposed legislation aims to eliminate the uncertainty surrounding the regulation of cryptocurrency assets in the United States by establishing clear legal definitions and regulatory boundaries, while also promoting the healthy development of the digital asset market.