Explainer-What is in the US Senate's landmark crypto bill?
SEC Fundraising Exemption
Crypto companies would be allowed to raise up to $50 million a year — and up to $200 million in total — without having to register with the SEC, as other companies do when fundraising.
Crypto tokens tied to investment contracts could still be sold under this regime, but with a reduced regulatory burden compared with how securities are treated.
This exemption would limit the SEC's ability to argue that most token sales are illegal securities offerings, a stance taken by the regulator under former President Joe Biden's administration and which many courts have also backed.
Decentralized Finance
Many popular crypto platforms are "decentralized," meaning that users interact directly with one another, in contrast to traditional exchanges, for example, which sit in between trades.
Decentralized platforms have argued that they are unable to comply with bank-like rules because those rules mostly assume there is a legal entity that sits in the middle of transactions and which holds customer funds.
The Clarity Act would define when a platform is sufficiently decentralized. If it does not meet the bar, it would be treated as a financial institution and would be required to report suspicious activity and monitor transactions, similar to banks.
Platforms would not be considered "decentralized" if they have the ability to block users, or if they have private permissions or hard-coded special privileges that other users do not have.
Tokenization
Tokenization generally refers to the process of turning financial assets — such as stocks, bonds and even real estate — into crypto assets. Crypto companies have been investing in tokenized stock trading ahead of expected moves by the SEC to allow companies to experiment with blockchain-based stock trading.
The bill would clarify that putting securities on the blockchain does not exempt them from securities laws. It also requires the SEC to further study the regulatory treatment of tokenized securities.
The bill would also mandate that, for regulatory purposes, tokenized securities generally be treated in the same way as the underlying securities they represent.
This article has been published in reuters.com via Yahoo News.
Explainer-What is in the US Senate's landmark crypto bill?
Senate Republicans on Wednesday unveiled the text of a long-awaited, landmark bill that would create a regulatory framework for cryptocurrencies, as negotiations on the legislation come down to the wire before Congress departs for August recess. Dubbed the Clarity Act, the bill aims to clarify...
finance.yahoo.com
