Cryptocurrency ACT 2020
What is the Cryptocurrency Act 2020?

Recently, congressmen put forth a new cryptocurrency bill labeled the Cryptocurrency Act 2020 to oversee and regulate crypto industry. The objective of the latest legislation is to provide additional clarification on digital asset regulations. The act was introduced by U.S. Senator - Paul Gosar.

The new
legislation categorizes digital assets into three main groups:

Cryptocurrencies

The first class described in the new bill is cryptocurrencies - Bitcoin, Bitcoin Cash, Litecoin, etc (cryptocurrencies that don’t fall under the current securities regulations). As per the latest bill, tokens as any digital asset that includes representations of US currency or synthetic derivatives resting on a blockchain or decentralized cryptographic ledger.

The latest
also confirms that synthetic derivatives determined by decentralized oracles or
smart contracts fall under this category as well.

Crypto-Commodities

The next
class is described as Crypto-Commodities. A key aspect of these tokens is the
fact that they contain some form of substantial fungibility (*Fungible
assets are interchangeable).

Crypto-Securities

The final on the list is crypto-securities. These tokens are simply any coin that fails the Howey Test.

{Note - The Howey Test determines that a transaction represents an investment contract if a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party. (Source - Investopedia)}

The Cryptocurrency ACT 2020 lays out the responsibilities of
the government agencies. If passed, the government agencies will gain
regulatory control over the assets in the jurisdiction, and will be held
responsible for informing the public on the appropriate licenses,
certifications, or registrations necessary to participate in the markets.

The three regulatory bodies mentioned in the bill are:

  • Commodity Futures Trading (CFTC)
  • Securities and Exchange Commission (SEC), and
  • Financial Crimes Enforcement Network (FinCEN)

These regulatory bodies would gain authority over their
respective digital asset types.

The primary goal of Cryptocurrency Act 2020 is to enforce regulations and to force crypto companies to play by the same rules.

Source - Yahoo!

Latest Posts

Subscribe to Newsletter

Enter your email address below to subscribe to newsletter