Crypto revolution: New law sheds light on the darkness of ICOs!

Crypto revolution: New law sheds light on the darkness of ICOs!

The US Senate has unveiled a new draft crypto market reform bill that could have a significant impact on the future of cryptocurrencies and initial coin offerings (ICOs). Loud Coinspeaker The main goal of the law is to provide legal clarity for token sales and legalize ICOs. The draft, which comes from the Senate Banking Committee, focuses on securities regulations and details which tokens are not considered securities.

Against the background of a growing crypto market, regulation has become more complex. This bill would give the Commodity Futures Trading Commission (CFTC) a larger role while reducing the jurisdiction of the Securities and Exchange Commission (SEC). This is notable because the CFTC has historically been responsible for regulating commodities and their derivatives, while the SEC focuses on securities.

Reforms and challenges

The new draft identifies tokens that do not confer financial rights as non-security-like and allows issuers initially classified as securities to be reclassified after a year without playing a central role in the appreciation of value. Legal experts have praised the clear structure of the law, but at the same time warned of possible legal gray areas that could arise, especially given the existing regulatory overlap between the CFTC and the SEC.

The SEC has adopted the Howey test to determine whether digital assets qualify as securities. High-profile SEC cases, such as the lawsuits against Ripple Labs (XRP) and BlockFi over unregistered securities offerings, highlight the need to clarify regulatory standards. Merkle Science highlights that stablecoins are a controversial topic as both regulators have different views on their classification.

Growing political pressure

In recent years, political pressure has increased on the government to create binding rules for the crypto market. This is underscored by the fact that the new draft, at 35 pages, is more compact and clear than the House CLARITY Act, which is 168 pages. The bill attempts to combine both economic opportunity for Republicans and consumer protections for Democrats.

These developments are critical for businesses in the crypto space as they need to understand the classification of their digital assets to ensure compliance. An example of the challenges posed by these overlaps is the case of BitMEX, which was sued in 2020 for operating an unregistered trading platform. The CFTC has also increased its collaboration with the SEC to close regulatory loopholes and establish consistent standards.

The introduction of the new Crypto Market Reform Act could represent a significant turning point for the crypto market and help provide much-needed clarity for investors and businesses.