A new draft of the Digital Commodities Consumer Protection Act (DCCPA) bill has started to circulate online, with some commentary suggesting it could be positive for decentralized finance (DeFi) and crypto. A prior draft version of the bill drew heavy criticism from industry representative bodies for containing too broad a definition for a ‘digital commodity platform,’ which ‘could be interpreted as a ban on decentralized finance (DeFi).’
[Coghlan, J. ‘Secretly circulating’ draft crypto bill could be a ‘boon’ to DeFi. (Accessed October 20, 2022)].
Among other things, this draft vests jurisdiction over the spot cryptocurrency markets and participants with the CFTC.
Gabriel Shapiro, General Counsel for Delphi Labs, made the draft available to the public in an effort to promote ‘transparency and discussion’. A copy of the 31 page draft bill may be accessed by clicking here
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Attorney Shapiro, in reviewing the draft legislation, notes:
[…] this version contains a limited exception to the term ‘digital commodity trading facility’ which would exclude persons who solely develop or publish software–this could be a boon to DeFi/crypto.
Shapiro, G. Tweet. (Accessed October 20, 2022)
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Head of Research at UpHold, a cryptocurrency exchange by tweet stated: "[…] that the newly released draft seems to follow similar regulations in the European Union and the United Kingdom, suggesting that the United States is 'finally getting their act together.” [Coghlan, supra].
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Comments on this revised draft legislation “[…] are a change of tone from the previous version of the bill, which was described by Web3 incubator and advocacy group Alliance DAO as one that ‘kills DeFi.’ The decentralized autonomous organization (DAO) wrote that the bill ‘creates a compliance architecture that precludes the concept of a system of smart contracts operating decentralized infrastructure with little or no reliance on human activity,’ as it required people to enforce compliance with the regulations” [Coghlan, supra].
“There have long been calls for regulatory clarity regarding digital assets in the United States” [Id]:
Anchorage Digital co-founder and president Diogo Mónica has called for regulatory clarity in the United States, which he said remains muddy due to the politicization of Web3 technology and a lack of coordinated effort from the industry. Speaking to Cointelegraph ahead of the company’s push into the Asian market, Mónica said there was a night-and-day difference between the regulatory experience in Singapore compared to the United States. ‘Singapore, it really is a breath of fresh air. […] It’s very different to have one regulator,’ Mónica said, adding regardless of the asset type it’s the Monetary Authority of Singapore (MAS), the country’s central bank, ‘that you interact with for everything.’ While in the U.S., he believes there’s ‘basically no clarity’ with little information on where assets legally fit, adding even if a company understands the rules governing an asset ‘you barely know which regulator you actually have to engage with’
[Coghlan. J. Anchorage co-founder to US regulators: ‘What we want is clarity’. (Accessed October 20, 2022)].
This month, the European Union (EU) agreed on the text for a unified licensing regime for cryptocurrency exchanges to operate across the EU bloc as part of its Markets in Crypto Assets Regulation (MiCA). The United States — despite being a traditional global leader in legal frameworks for technological innovation — has not provided that same regulatory clarity […] a unified federal regime for cryptocurrency exchanges listing digital commodities does not exist. To create one, Congress must pass legislation that clearly defines “digital commodity” and creates jurisdiction for the Commodities Futures Trading Commission (CFTC) to supervise national digital commodities exchanges. Recent bipartisan bills addressing the topic suggest that this achievement may be within reach.
Li, C. and Entchev, I. It’s time for the feds to stop leaving crypto regulation to the states. (Accessed October 20, 2022).
Time will tell whether this revised draft of the Digital Commodities Consumer Protection Act (DCCPA) will adequately address these regulatory clarity truancies in the U.S cryptosphere.
