Crypto Chaos? House Republicans Set the Stage to Reign in Big Firms!

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Ah, how delightful! Republican lawmakers, fresh from their most recent high-stakes bout with financial technology, have graced us with a *new* crypto bill. This draft, brought to you by the House Committee on Financial Services and the House Committee on Agriculture (because why not mix financial innovation with a bit of farming flair?), promises a “comprehensive” regulatory framework for those cheeky digital assets.

But wait, it’s not just any bill. This draft is the glamorous offspring of the Financial Innovation and Technology for the 21st Century Act (or FIT21, for those in a rush), which managed to make its way through the House in 2024. Finally, a bill that aims to curb market concentration while, oh, how noble—fostering innovation and consumer protection. The crowd goes wild!

Draft Bill Strikes at Big Firm Control in Crypto

On May 5, the valiant Chairmen French Hill, G.T. Thompson, Bryan Steil, and Dusty Johnson (names that sound like they belong in a Western film) unveiled the 212-page masterpiece. And what’s this? One of the key provisions seeks to lower the threshold for defining an ‘affiliated person’ from 5% to 1%. Because we all know the crypto space was just too big for its own good.

“The term ‘affiliated person’ means a person (including a related person) that, with respect to any digital commodity— ‘(A) acquires more than 1 percent or more of the total outstanding units of such digital commodity from a digital commodity issuer,” the bill’s *riveting* language declared.

Why, you ask? To diminish the mighty grasp of those colossal crypto firms and, in their place, allow more *democratization*—in case you missed it, the little people need a shot too, right?

“This bill makes clear the regulatory regime proposed is going to push against that fact and strongly encourage more small-d ‘democratization’ of the space,” Justin Slaughter, Vice President of Regulatory Affairs at Paradigm, chirped.

As if that weren’t enough, the bill also says that affiliated folks must hold their digital commodities for at least 12 months before they can part with them—how generous! The cherry on top? Transactions will be limited to a modest 5% of the holdings or 1% of the average weekly trading volume. Nothing excessive, just a wee taste.

But don’t worry, once the blockchain system is deemed “mature” (as if we’re all waiting for the blockchain to hit its adolescence), the holding period shrinks to just 3 months. Clearly, speed is the name of the game. Meanwhile, transaction limits remain just as sensible: 1% of the total units or weekly trading volume. This, my friends, will surely eliminate market manipulation—or at least make it a bit harder to pull off.

New Bill Clarifies SEC and CFTC’s Split Authority Over Crypto

The draft is ever so kind to clarify one thing: the divide between the SEC and CFTC. At last, no more confusion—digital asset projects will know exactly which regulatory monster to feed. How kind of them!

“Digital asset developers will have a pathway to raise funds under the SEC’s jurisdiction. Market participants will have a clear process to register with the CFTC for digital commodity trading,” the draft’s handy one-pager gleamed.

But hold your applause, for there’s more! The draft also turns its spotlight on public and permissionless blockchains, explicitly prioritizing them. The bill’s only hesitation? Those private, permissioned networks might not make the cut. A subtle nod to decentralization. No big surprise there.

And, in a move that is likely to raise more than a few eyebrows (or perhaps just a wink), the bill gives a generous nod to airdrops—those thrilling token giveaways. Of course, they come with conditions. Because nothing in life is free.

“Regulatory clarity is long overdue in digital asset markets. Today marks the first step in advancing a comprehensive framework that protects consumers, fosters innovation, and closes regulatory gaps in oversight. It will give digital asset developers and users the certainty they need and have asked for,” Chairman Thompson, ever the visionary, quipped.

And so, dear reader, this dazzling draft continues to evolve. On May 6, the subcommittees will meet for a joint hearing—because what’s better than a committee meeting? More committee meetings. And who knows? Perhaps there will be amendments before this bill faces its eventual vote. Oh, the suspense!

As digital assets inch closer to mainstream acceptance (or maybe just stumble there), this bill might just set the stage for global crypto regulations. Let’s hope it doesn’t get caught in a tangled web of its own making. One can dream, can’t one?

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2025-05-06 09:18