Author: Jack Inabinet Source: bankless Translation: Shan Oppa, Golden Finance

The cryptocurrency industry has been struggling in the "purgatory" of vague regulations for more than ten years. Now, on the world's largest financial stage, the dawn of regulatory clarity is finally emerging.

The U.S. Senate is actively considering two independent bills, both of which aim to clarify the implementation details of digital asset supervision. One was proposed by the Senate Banking Committee and the other came from the Senate Agriculture Committee.

The focus of analysis by many cryptocurrency commentators is on the upside potential of industry implementation after the legislation is clarified (especially in regulated financial scenarios), but few pay attention to this regulatory clarity, which may also plant many hidden dangers for the current leading cryptocurrency players.

This article will focus on sorting out the various risks in these two Senate bills that deserve vigilance.

The high price of regulatory clarity

The Digital Asset Market Clarity Act (DAMCA) proposed by the Senate Banking Committee and the Digital Commodity Intermediary Act (DCIA) proposed by the Senate Agriculture Committee are both committed to regulating cryptocurrency-related activities in the United States.

Many people are excited about the introduction of the bill, but if it officially takes effect according to the current provisions, current industry participants may be excluded from the compliant future of cryptocurrency.

Multiple challenges of the Digital Asset Market Clarity Act

Let’s first look at the Senate Banking Committee’s “Digital Asset Market Clarity Act.” Title I of the Act makes a number of amendments to the Securities Act of 1933. This amendment will give the U.S. Securities and Exchange Commission (SEC) the power to unilaterally formulate guidelines to determine how securities laws apply to the field of digital assets.

This means that the SEC will have the right to determine under what circumstances relevant participants in the initial issuance of tokens (airdrop recipients, paid key opinion leaders, project team members and investors) need to bear joint and several liability with the token issuer; at the same time, whether digital assets are classified as securities or commodities will ultimately be determined by the SEC.

Title II of the bill contains a highly controversial provision: prohibiting stablecoin issuers from distributing income to passive currency holders. This provision will establish a permanent competitive advantage for the banking industry, but put competitors in the cryptocurrency-native track at a disadvantage.

At the same time, Title III of the bill adheres to a purely stringent interpretation of "decentralization." If blockchain applications accessible to U.S. users fail to meet the high standards set by it, they will be subject to comprehensive regulatory requirements.

DCIA Core Issues

Looking at the "Digital Commodity Intermediary Act" proposed by the Senate Agriculture Committee, the situation is also not optimistic.

The Senate Banking Committee oversees the SEC, while the Agriculture Committee governs the U.S. Commodity Futures Trading Commission (CFTC). Comprehensive reform of the cryptocurrency market structure requires legislative support from the two committees. It is foreseeable that the two bills will be coordinated and integrated to form a comprehensive proposal, which will be submitted to the full Senate for approval.

The bill will expand the jurisdiction of the Commodity Exchange Act to an unprecedented scope, giving the CFTC, an agency originally responsible for regulating the commodity futures market rather than the spot market, absolute jurisdiction over spot transactions of digital assets.

Any fungible digital assets that can be transferred point-to-point on the blockchain without an intermediary will be included in the scope of supervision, including network tokens such as Ethereum and meme coins such as Dogecoin. The CFTC will establish a comprehensive license issuance and supervision system to implement relevant regulations. Whether it is Coinbase, the New York Stock Exchange, or Hyperliquid, they cannot escape the constraints of this system.

The final result is that all entities subject to the bill will completely lose their right to make independent choices; the CFTC will be given new regulatory powers and will supervise digital assets far more than any other asset class, and relevant entities will be forced to comply.

The road ahead is not smooth

For many years, we have been looking forward to regulatory clarity on the cryptocurrency market structure. But when that day finally approaches, investors have to accept a reality: Clarification in the regulation of digital assets may smooth out the edges of the cryptocurrency industry.

Once regulatory rules are implemented, many non-compliant cryptocurrency projects will most likely be eliminated from the market. Therefore, it is more important than ever to prepare for the compliant future of cryptocurrency and adjust the layout of individuals and investment portfolios.

Although the drafting of the two bills took several months, which should have given the deeply involved cryptocurrency lobby ample time to push for "favorable" clarifying legislation, many leading cryptocurrency companies have now expressed their opposition to the two bills. At present, the official effective date of the bill has not yet been determined, and the final fate of the "Digital Asset Market Clarity Act" and the "Digital Commodity Intermediary Act" is now in the hands of the U.S. Congress.