The Digital Asset Market Structure and Investor Protection Act, new legislation proposed by Congressman Don Beyer (D-VA-08) that would protect consumers and promote innovation by incorporating digital assets into existing financial regulatory structures, has been noted to be a step in the right direction in clearing the current regulatory uncertainty surrounding cryptocurrencies.
Beyer who proposed the legislation which is an amendment of the 1934 securities act to include cryptocurrencies said: “The United States should provide a legal and regulatory environment which promotes this type of innovation and growth” adding “Our laws are behind the times, and my bill would start the long-overdue process of updating them to give digital asset holders and investors basic protections.”
The proposed legislation, if passed, will likely have positive implications on already existing cases that have been lacking clarity, especially in the Ripple versus SEC case.
The Ripple versus SEC case has been dragging on for over seven months. Most recently, the SEC filed a notice for the appearance of a new trial lawyer, Attorney Pascal Guerrier.
While Ripple seems to be having small wins in their favor, Attorney Jeremy Hogan thinks that the soonest a settlement may be reached is likely to be in September. Hogan further analyzed the possible impact that the newly proposed legislation’s passage could have on the case.
One thing the legislation does is define digital asset security as digital assets that provide the holders of the digital assets with equity or debt interest; rights to profits, interest, or dividends payments; voting rights in major corporate actions; and liquidation rights in the issuer. Further, it states that a digital asset is a security when the platform of the issuer is not fully built out and the money from the sale funds the development of the proposed services, goods, or platform of the issuer.
This definition practically makes the SEC query against Ripple’s XRP moot as the platform was already operational before the sale. Ripple’s XRP also does not have the other characteristics of the digital asset security definition.
An additional issue Attorney Hogan irons out is whether the legislation, if adopted, can apply retrospectively to the case at hand. He concluded that it is likely to be, as its application would completely throw out the case in favor of Ripple. Effectively removing Ripple’s XRP from the purview of the SEC’s control for not being digital asset security, and will therefore mean the digital token should instead be regulated by the Commodities and Exchange Commission.
While it is not known if the legislation will be adopted and when it will come into effect, it could very well settle the case for Ripple and be a watershed moment for cryptocurrencies regulation in general.