On April 27th, the United States House of Representatives held simultaneous hearings focusing on digital assets. The Financial Services Committee hearing, titled “The Future of Digital Assets: Identifying the Regulatory Gaps in Digital Asset Market Structure”, and the Agriculture Committees, “The Future of Digital Assets: Identifying the Regulatory Gaps in Spot Market Regulation”, both tackled the gap between current regulations and digital assets. This hearing followed an op-ed piece released by former SEC Chair Jay Clayton and former CFTC Chair Timothy Massad in December.
Hearings featured witnesses from various backgrounds who discussed how existing securities laws are not designed to encompass digital assets. Commission partner Zachary Zweihorn argued that existing laws do not effectively match the needs of digital asset securities. American University lawyer Hilary Allen disagreed, claiming that blockchain-based businesses are able to comply with existing regulations.
Daniel Gorfine, founder, and CEO of Gattaca Horizons voiced a middle ground to the discussion by asserting the importance of having a balance between the need for compliance and maintaining the public's trust. Katten Muchin Rosenman partner Daniel Davis addressed the unclear authority of digital assets that have yet to identify whether they are a security or commodity product. He pointed out the flaws with the current SEC framework and argued that these flaws have allowed significant gaps in regulation.
Purvi Maniar, FalconX Holdings’ deputy general counsel emphasized how mandating SEC disclosures potentially make peer-to-peer transactions unobtainable. Former Chair of the CFTC, Timothy Massad proposed a joint project stem between the SEC and CFTC to establish a set of basic principles for Bitcoin traders who are not currently regulated. Joseph Hall, partner of Davis Polk & Wardwell, stated that securities digital assets will likely not survive regulation in the United States and that these assets are “different in kind from what preceded them”. The two committees plan to hold a joint hearing next month to further discuss this topic.
Ashley Carter
- 2023-04-28
US House of Representatives Hold Simultaneous Hearings on Digital Assets
On April 27th, the United States House of Representatives held simultaneous hearings about digital assets. Witnesses discussed if current securities laws encompass digital assets, if blockchain-based businesses are able to comply with existing regulations, the unclear authority of digital assets, the flaws of the current SEC framework and more.
