Two senior US lawmakers have outlined six core principles which they believe should form the basis of any future regulatory framework for digital assets in the country.

French Hill, US House Committee on Financial Services Chairman, and GT Thompson, House Committee on Agriculture Chairman, have argued that a lack of regulatory clarity in the US has pushed digital assets investors and innovators to other destinations.

In an opinion piece for CoinDesk, the two congressmen put the blame on the previous Biden administration for blocking innovation in the digital assets sector “through a relentless campaign of lawsuits and enforcement actions.”

“The SEC failed to clarify how existing securities laws apply and – more importantly – don’t apply to digital asset transactions,” the article reads. “This lack of regulatory clarity stifled the digital asset ecosystem, pushing growth out of the United States to jurisdictions that have established clear rules of the road.”

The lawmakers have insisted upon the importance of a clear regulatory framework for digital assets, one which is “both balanced and iron-clad for the future.”

Six core principles

The lawmakers have argued that any digital assets regulatory framework should revolve around the following six core principles in order to effectively address the challenges and complexities of the sector.

• First, any future legislation should promote and not discourage innovation. The opinion piece criticises the Biden administration for doing the opposite on this particular point.
• Second, legislation should address the key question of whether specific digital assets qualify as securities or non-securities. Lawmakers have called for a clear classification of assets.
• Third, the issuance of new digital assets and their sale should come under the jurisdiction of the SEC. Investors’ protection should be ensured, and developers should disclose all relevant information that investors need.
• Fourth, there should be similar regulatory requirements for centralized, custodial exchanges and intermediaries facilitating transactions with non-security digital assets, with the Commodity Futures Trading Commission (CFTC) having the authority to impose requirements on both.
• Fifth, customer funds should be kept separate with qualified custodians, and should be protected during bankruptcy.
• Sixth, the decentralized nature of digital assets should be protected by legislation and they should not be exposed to requirements which are typical of centralized finance. Also, individuals must have the right to self-custody their digital assets.

Push for legislation

In February, the Committee released a discussion draft for a bill aimed at establishing “a framework for the issuance and operation of dollar-denominated payment stablecoins in the United States.”

In the same month, a number of Committee members wrote a letter to Federal Deposit Insurance Corporation (FDIC) Acting Chairman Travis Hill “to better understand the plan for FDIC’s regulatory and supervisory work related to the digital asset activities of regulated financial institutions.”

In March, Committee members wrote to then Acting Chairman of the SEC, Mark Uyeda, “encouraging the Commission to take additional steps to remove inappropriate hurdles put in by place by the Biden Administration that hinder the digital asset ecosystem.”

Also in March, the Committee held a hearing to examine “the promise of blockchain technology, specifically in payments with stablecoins.”

And last week, the Committee said it had written to a number of US financial regulatory agencies asking them “to withdraw several [Biden-era] regulatory actions that have stifled innovation, restricting financial institutions’ engagement in digital assets and hindering the growth of financial technology (fintech) companies.”

Meanwhile, the SEC has also intensified efforts to establish digital assets regulation. The agency’s crypto task force held its first public meeting with digital assets experts last month.