U.S. lawmakers have introduced a new bill seeking to establish a regulatory framework for cryptocurrencies. Released on May 5, 2025, the 212-page proposal classifies digital assets under the CFTC or SEC and creates rules for payment stablecoins. It aims to substitute the fragmented regulatory landscape with clear categories and pathways, addressing both innovation and investor protection. This move comes amid increasing global regulatory competition, spurred by jurisdictions like the EU, Japan, and Switzerland, which have already set comprehensive regulations for cryptocurrencies.
In a significant move, key members of the U.S. House of Representatives have unveiled a draft bill aimed at establishing a much-needed regulatory framework for cryptocurrencies. Released on May 5, 2025, this comprehensive 212-page proposal focuses on classifying digital assets and defining their regulation. The proposal is seen as a crucial step towards overcoming the patchwork of regulations that has long plagued the cryptocurrency space.
The draft bill outlines specific criteria for classifying digital assets under either the Commodity Futures Trading Commission (CFTC) or the Securities and Exchange Commission (SEC). It even introduces rules for potential reclassification. Notably, the bill distinguishes payment stablecoins from other types of digital assets, aiming to clarify existing categories. Additionally, regulations will apply to exchanges and secondary trading markets, bringing them under the scrutiny of the Bank Secrecy Act.
As per the bill, issuers of new assets will be required to provide detailed disclosures to regulators. Interestingly, there are some exemptions for developers and infrastructure providers, which supporters argue will help foster innovation while maintaining consumer protection. Proponents of the legislation claim that implementing clear rules will strike a better balance between investor safety and industry development, aligning with long-held demands from within the crypto community.
The backdrop of this legislative move is a long-standing fragmentation in U.S. crypto regulation. Dating back over a decade, this confusion has led numerous agencies to employ their existing frameworks to deal with cryptocurrencies without clear guidelines. For instance, the SEC has classified many tokens as securities, while the CFTC treats Bitcoin like a commodity. This discord has left individual states to craft their own regulations, resulting in complications like New York’s BitLicense and Wyoming’s more lenient laws, leading to an inconsistent regulatory landscape.
Just to underscore, this uncertainty has had immediate impacts: Ripple faced $700,000 in fines in 2015, and BTC-e was dealt a hefty $110 million fine in 2017 for failing to comply with FinCEN regulations. Hence, this bipartisan initiative is arguably the most serious attempt to close the regulatory gap that has left digital currencies in limbo since Bitcoin’s inception.
Central to this legislative effort is the long-standing debate over whether digital assets should be treated as securities or commodities. The proposed bill aims to address this contentious issue directly. It proposes a mechanism that would enable digital assets to transition from securities to commodities as they become more decentralised, which has crucial implications for the sector. This concept builds on the argument that entirely decentralised networks fall outside traditional securities frameworks.
This notion appears to draw inspiration from a 2018 speech by former SEC official William Hinman, who suggested that sufficiently decentralised networks like Ethereum might not qualify as securities. This attempt to create a certification process for decentralisation could provide the lasting clarity that industry players have sought for some time, potentially reducing the current case-by-case regulatory enforcement approach that has typified U.S. crypto regulation.
The legislation also arrives amid growing global competition, as other countries establish their own regulatory frameworks at a rapid pace. The European Union has already rolled out the Markets in Crypto-Assets Regulation (MiCA), which aims to create a coherent regulatory environment across member states while safeguarding consumers. Countries like Japan and Switzerland have also taken proactive steps to provide clarity and foster growth in their respective digital asset markets.
Recent findings show that 33 out of 60 nations studied have fully legalised cryptocurrencies, and this includes 12 G20 nations. This is indicative of a wider shift towards acceptance rather than restriction globally. The legislation’s emphasis on clarity, along with investor protections, echoes the need for an effective balance between fostering innovation and ensuring consumer safety – an imperative mirrored in how countries like Australia approach cryptocurrency regulation.
As the U.S. moves forward with these proposed regulations, many stakeholders in the crypto industry are keenly awaiting the outcome while fearing that delays could jeopardise the United States’ position in the rapidly evolving digital economy.
