On Tuesday, May 21 the House Rules Committee is going to vote on a rule that would send two enormous pieces of crypto legislation to the House Floor for a vote. These two bills have previously passed out of Committee with bipartisan support (much to the dismay of Ranking Member Maxine Waters who tried to prevent this from happening) and are expected to easily pass the House Floor and be sent to the Senate.
H.R. 4763 also known as the Financial Innovation and Technology for the 21st Century Act will have an enormous impact on the entire crypto industry. This bill, clocking in at over 212 pages last time I checked, is a comprehensive overhaul of the current structure of the SEC and the CFTC. These two regulatory bodies are the two that are often in conflict with each other claiming jurisdiction over the crypto space. This bill essentially will end this power struggle between the two establishing BTC and ETH oversight not to the SEC but to the CFTC.
While the SEC regulates the stock market and the asset market overall the CFTC, Commodities Future Trading Commission has regulatory authority over commodities. Examples of commodities are food products say corn, sugar, etc., and are trading 24/7 operating around the clock, unlike the SEC which does a typical 9-5 five days a week. The SEC is overseen by the House Financial Services Committee but the CFTC is overseen by the House Agriculture Committee hence the reason it had to pass both Committees and was done in a bipartisan fashion.
With this legislation, BTC and ETH will finally have the protection they need from SEC Chairman Gary Gensler as they will be deemed commodities.
The second and just as important but in an entirely different way. H.R. 5403 is also known as the CBDC Anti-Surveillance State Act. This legislation once codified into law, amends the Federal Reserve Act, prohibiting the Federal Reserve banks from offering/issuing CBDCs for monetary policy.
While the Federal Reserve has already come out and said that there were no plans on issuing a CBDC, and have pushed back those that have wanted the Federal Reserve to do so, this would just flat out make it illegal and impossible for them to do so. Furthermore, it prevents the Secretary of Treasury from directing the Federal Reserve to issue one without Congressional Authorization.
Combined it makes sure that unless Congress explicitly authorizes its creation the US will not now nor ever have a CBDC.
Combined these two bills are likely going to be what the crypto legislation agenda balances on for the rest of this year and thus this Congress. It will pass the House the question is will the Senate even attempt to do anything or will they sit on their hands. Given this is a popular area with the youth the slight Democratic majority will likely be forced to do something since the Republican Party has taken such a positive and pro crypto stance.
If you have any questions feel free to comment them below and I will do my best to answer them ASAP!
I doubt feds want to give away the power of controlling people’s finances (because somebody might be a terrorist!).
Maybe they’re trying to make USDC a CBDC without really calling it one.
reply
It will be interesting if there is any political backlash when the eth foundation changes monetary policy once again to increase supply so they can issue more tokens to stakers or they slash some custodians stake and investors realize they were misled to believe it was a decentralized commodity.
reply
I am not super knowledgeable about commodities and how they function but from my understanding ETH would better fit commodities since when you think about ag products supply increases and decreases something that ETH does. I think of slashing almost as a natural weather disaster that destroys a harvest. BTC being so finite doesn't fit as well but under commodities it will be MUCH MUCH better protected than under the SEC!
reply
When is the last time you saw an intentional natural disaster created by a small group of people destroy a harvest? (Slashing is a governance decision not a natural function).
Dynamical supply is not what makes a commodity a commodity. Besides dynamical supply was only instituted post merge. So less than 2 years ago and the merge itself was a forced software upgrade. I don't think anyone would argue eth became more like a commodity after the merge. The argument is it was before therefore it should still be now.
You can argue eth deserves a different classification other than security. I don't really buy any arguments that it is a commodity, It got labelled as such because the industry lobbied the SEC and Hinman made a statement the agency did not want him to make which set a precedent.
I still believe congress needs to define digital asset classifications better. Maybe more classifications than simply commodity and security should exist.
reply
uhhhh I mean China's 3 Gorges Dam has caused them to suffer considerably the last few years... the UAE, Ethiopia, and Egypt have all caused massive crop/harvest loss over stupid moves by their leaders over the years.
reply
That's a real stretch my friend.
reply
Not according to NOAA data. The effects of their decisions have been clear and the mismanagement is significant. Granted they will never beat the granddaddy of them all with the Stalin-caused Ukrainian famine but killing a minimum of 5 million people due to being an idiot with harvests is hard to beat
reply
I am not saying it's a stretch that these decisions have had a major impact on the commodities themselves. I am saying that comparing that to a bunch of crypto nerds voting to slash someone's stake in software network as justification for its status as a commodity is quite a stretch.
I don't care what the regulators call eth. I just don't like the idea that it achieved its status through backdoor dealings rather than honest due process.
reply
Between the two I would say BTC is more of a stretch given it has a set max supply. Commodities do not have that so its why within the standard understanding ETH is the better fit under the current understanding... which is going to change but nonetheless
This was an extremely helpful recap! Thanks for your work to keep us apprised.
reply