House Crypto Draft Released: Clear Definition of Digital Assets, Regulatory Gaps Remain
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House Crypto Draft Released: Clear Definition of Digital Assets, Regulatory Gaps Remain
This legislation introduces definitions of core industry concepts, including digital goods, blockchain systems, decentralized governance, approved payment stablecoins, and mature blockchain systems.
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On May 5, leaders of the U.S. House Committee on Financial Services and the Committee on Agriculture released a discussion draft outlining a federal framework for regulating the crypto asset industry in the United States.
The legislative draft was jointly released by House Financial Services Committee Chairman French Hill (Republican, Arkansas), Agriculture Committee Chairman Glenn "G.T." Thompson (Republican, Pennsylvania), Digital Assets Subcommittee Chair Bryan Steil (Republican, Wisconsin), and Commodity Markets Subcommittee Chair Dusty Johnson (Republican, South Dakota).
These lawmakers emphasized that the bill aims to harmonize regulatory responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC), while providing legal definitions for key terms in blockchain and crypto asset markets.
Chairman Hill stated, "This discussion draft builds upon bipartisan, bicameral progress achieved during the 118th Congress, offering a durable framework to protect consumers and uphold America's leadership in digital innovation."
He added that the committee intends to incorporate public feedback and work with the Donald Trump administration to advance the enactment of the final legislation.
Digital Asset Classification
The legislation introduces definitions for core industry concepts, including digital commodities, blockchain systems, decentralized governance, approved payment stablecoins, and mature blockchain systems.
Additionally, the draft explicitly states that distributions through mining, staking, or user rewards—referred to as "end-user distribution"—do not constitute securities nor sales under current law.
Chairman Thompson stressed the urgency of regulatory clarity, noting that the proposed framework would fill regulatory gaps and provide the certainty developers and users have long sought.
The draft establishes registration pathways for digital commodity exchanges, brokers, and dealers under CFTC oversight, while allowing the SEC to retain jurisdiction over securities and certain hybrid assets. Entities performing custody functions, transaction facilitation, or client interactions must follow newly defined registration and disclosure procedures.
Subcommittee Chairman Steil said, "This is the dawn of a golden age for digital assets, and the House is leading the way."
Johnson echoed this sentiment, stating that the U.S. must offer a sensible regulatory regime to maintain its position as a global hub for crypto asset investment and innovation.
The draft also preserves protections for DeFi protocols and self-custody. It specifies that DeFi trading protocols and messaging systems are exempt from traditional financial regulations as long as they do not custody user funds or exercise discretionary control.
The bill also prohibits the Treasury Department or the Financial Crimes Enforcement Network (FinCEN) from issuing rules that restrict individuals' ability to self-custody crypto assets through wallets.
Launching the Legislative Process
The committees have scheduled a joint hearing for May 6 titled "American Innovation and the Future of Digital Assets: A Blueprint for the 21st Century," aimed at launching formal legislative discussions and gathering stakeholder input.
The draft includes provisions for joint rulemaking by the SEC and CFTC, as well as research into DeFi, NFTs, and blockchain infrastructure through expanded functions of federal agencies' innovation offices.
By establishing legal definitions and clear jurisdictional boundaries, the proposed bill aims to eliminate regulatory uncertainty surrounding crypto assets in the United States, while encouraging responsible growth and oversight of digital asset markets.
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