The US senator’s bill seeks to cushion crypto exchanges from SEC enforcement actions

by · October 1, 2022

US Senator Bill Hagerty, a member of the Senate Banking Committee, introduced legislation seeking a safe harbor for cryptocurrency exchanges from “certain” Securities and Exchange Commission (SEC) enforcement actions.

The Digital Trading Clarity Act of 2022, introduced by Sen. Hagerty, aims to provide regulatory clarity around two primary concerns plaguing crypto exchange establishments – (i) the classification of digital assets and (ii) related obligations under existing securities laws.

A bill to provide digital asset intermediaries with safe harbor from certain enforcement actions by the Securities and Exchange Commission, and for other purposes. Source: congress.gov

Senator Hagerty outlined an overview of the issues amid regulatory hurdles:

“The current lack of regulatory clarity for digital assets presents entrepreneurs and businesses with a choice: navigate the significant regulatory ambiguity in the US, or move overseas to markets with clear digital asset regulations.”

The aforementioned regulatory uncertainty, according to Senator Hagerty, discourages investment in the crypto space and hinders job creation opportunities in the United States. As a result, the blockade “jeopardizes US leadership in this transformative technology at such a crucial time.”

The senator believed that the legislation, once passed, would not only provide “much-needed security” to crypto businesses, but also improve the growth and liquidity of US cryptocurrency markets.

To establish the legislation as law, the bill needs the approval of the Senate, the House and the President of the United States.

Related: US lawmakers are proposing to amend the Cybersecurity Act to include crypto firms that report potential threats

In parallel with the regulatory reforms recommended by the US senators, the federal government intensified its efforts to study the possibility of central bank digital currencies (CBDCs) in the US market.

Under Biden’s directive, the Office of Science and Technology Policy (OSTP) analyzed 18 CBDC design choices – and outlined various pros and cons of each system:

“It is possible that the technology underlying a permissionless approach will improve significantly over time, which could make it more suitable for use in a CBDC system.”

The technical evaluation for a US CBDC system highlighted the department’s inclination towards a hardware-protected off-ledger system.