When Sen. Cynthia Lummis R-WY and Kirsten Gillibrand D-NY introduced their bipartisan Responsible Financial Innovation Act in early June, it was widely viewed as a policy that would undermine the jurisdiction of the US Securities and Exchange Commissions over the cryptocurrencies. But Lummis doesn't think the SEC will lose much oversight in its proposed crypto regulatory framework.
She really doesn't think the SEC is going to lose regulatory control. I think they will hold onto it when the digital assets are investment contracts, she told Decrypt on the latest episode of the gm podcast. I think you'll have situations under our ancillary asset definitions where you'll have a digital asset, let's say Bitcoin, which is the underlying asset that's regulated by the CFTC, but the investment contract that it's contained in is regulated by the SEC.The very definition of the investment contract in notes extracted from the Securities Act of 1933 would leave the CFTC to regulate Bitcoin and Ethereum. The SEC would oversee vehicles for investing in those assets like any exchange-traded fund ETF.
Citing Law 33 in the bill is a significant detail. It is widely believed to be the most viable path for a Bitcoin spot ETF. The SEC has already approved several Bitcoin futures ETFs under the Investment Company Act of 1940, saying it offers certain investor protections not covered by the 1933 act. But when the commission approved the Teucrium Bitcoin Futures Fund under Law 33 in April, renewed hope for a spot ETF.
Grayscale CEO Michael Sonnenshein was quick to write a lengthy Twitter thread to make his case for turning Grayscale Bitcoin Trust GBTC into a Bitcoin ETF. And when it looked like the SEC might deny the request, Grayscale turned to the crypto community for support and had his legal team try to influence the commission. It still didn't work. When the SEC denied the request last week, Grayscale sued.
Of course, there is no guarantee that the GBTC conversion will take place under the Lummiss regulatory framework. But it would set a precedent for the creation of crypto ETFs under Law 33. That would provide some clarity to the current crypto regulatory climate that Lummis likened to stumbling in the dark and hitting your toe.
If you're walking in the dark in terms of regulation and your first encounter with a regulatory agency is to be slapped with an enforcement action, it's like stubbed your toe really hard in the middle of the night, or maybe breaking your toe. foot in the middle of the night. the night he told Decrypt. It leaves a bitter taste in people's mouths.
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