The Cryptocurrency Act of 2020 is a draft bill first brought in front of the House of Representatives by U.S. Congressman Paul Gosar (Republican Arizona). The proposed bill aims at bringing regulatory clarity to the cryptocurrency sector. According to the copy obtained by Forbes, the bill seeks to clarify which federal agencies should regulate cryptocurrencies and which aren’t.

First of all, the bill divides the entire cryptocurrency sector into three parts. As a result, we can now see crypto-commodities, crypto-currencies, and crypto-securities in the crypto space. Accordingly, it has proposed a federal crypto regulator for each of the categories to notify the public of any licenses and registrations required.

What the Cryptocurrency Act of 2020 Explains?

The Commodity Futures Trading Commission (CTFC) will regulate crypto commodities. However, the Securities and Exchange Commission (SEC) will regulate the crypto-securities. Further, the Financial Crimes Enforcement Network (FinCen) will actively work on crypto-currencies. Besides, the amendment bill also provides definitions of three types of cryptocurrencies. Crypto commodity means economic goods or services. Crypto-currency is defined as representations of US currency or synthetic derivatives resting on a blockchain. And, crypto-security, on the other hand, means all debt, equity and derivative instruments that rest on a blockchain.

The Secretary of the Treasury, acting through the Financial Crimes Enforcement Network, shall issue rules to require each crypto-currency including synthetic stablecoins. For this reason, it will allow tracing of transactions in the crypto-currency and persons engaging in such transactions like that required of financial institutions w.r.t. currency transactions. The bill explains.

Moreover, regulatory clarity has been sought-after since long by both lawmakers and market participants. The U.S. lawmaker Warren Davidson reintroduced the Token Taxonomy Act earlier this year. Because of which cryptocurrencies get a clear legal standing in the United States. SEC, CFTC, and FinCEN all three of them have most recently issued a joint statement which states that the crypto industry must comply with various banking and financial services laws in the United States.

The bill is under observation and will move ahead in the New Year to offer regulatory clarity.

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