When Sen. Cynthia Loomis (R-WY) and Kirsten Gillibrand (D-NY) introduces her bipartisan Responsible Financial Innovation Act In early June, it was widely seen as the policy that would reduce of the US Securities and Exchange Commission Jurisdiction over crypto.
But Loomis doesn’t think the SEC will lose much oversight in its proposed crypto regulatory framework.
“I really don’t think the SEC is going to lose regulatory control, I think they’ll keep it when [the digital assets] Investments are contracts,” she told decrypt On the latest episode of the GM Podcast. “I think you would have situations under our definition of a subsidiary asset, where you would have a digital asset, say bitcoin, that is the underlying asset that is regulated by the CFTC, but the investment contract in which it is implied. regulated by the SEC.”
The bill’s investment contract definition, which itself was drawn from the Securities Act of 1933, would leave the CFTC to regulate bitcoin and ethereum. The SEC will oversee the vehicles for investing in those assets like any exchange-traded fund (ETF).
The citing of the ’33 Act is an important detail in the Bill. This is widely considered to be the most viable route to bitcoin spot ETFs.
The SEC has already approved several bitcoin futures ETFs under the Investment Companies Act of 1940, saying it offers certain investor protections not covered by the 1933 Act. But when the commission approved the Teucrium Bitcoin Futures Fund under the ’33 Act in April, it renewed hope for spot ETFs.
Going fast, writes Grayscale CEO Michael Sonnenshein long twitter thread To make its case for converting the firm’s Grayscale Bitcoin Trust (GBTC) into a bitcoin spot ETF. And just when it looked like the SEC might reject the application, Grayscale turned to the crypto community to garner support and its legal team tried to influence the commission.
It still didn’t work. When the SEC rejected the application last week, Grayscale sued.
There is no guarantee that the GBTC conversion will be completed under Lummis’ regulatory framework. But it will set a precedent for creating crypto ETFs under ’33 Act’. This will provide some clarity to the current crypto regulatory environment, which Lumis likened to stumbling in the dark and stumbling your toe.
“If you’re walking around in the dark in terms of regulation, and your first bump in a regulatory agency is to get slapped with an enforcement action, it’s like stubbing your toe in the middle of the night really badly— Or maybe breaking your toe in the middle of the night,” she added. decrypt, “It leaves a bitter taste in people’s mouths.”
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