New US Crypto Legislation May Clarify Definitions of Commodities and Securities

Regulatory Framework Proposal: A draft bill from the Senate Agriculture Committee aims to clarify the classification of cryptocurrencies as either digital commodities or securities, addressing the regulatory uncertainty that has hindered institutional adoption and created legal disputes.

Shift in Oversight: The proposed legislation would expand the Commodity Futures Trading Commission's (CFTC) role in overseeing digital commodities, while the Securities and Exchange Commission (SEC) would maintain authority over securities, creating a clearer regulatory landscape for crypto assets.

Operational Standards for Crypto Firms: The bill introduces stricter operational and risk-management requirements for crypto exchanges, including the separation of trading and custody functions, and mandates consumer protections to reduce fraud and enhance market integrity.

Impact on Stakeholders: The new framework is expected to benefit institutional investors by providing clearer rules, while retail users may experience improved trust and reduced fraud, although the variety of unconventional tokens available for trading could decrease.