- The leaked draft bill imposes certain rules and restrictions on the crypto industry, such as the registration of all crypto entities.
- If passed, failure to comply with the laws would result in penalization.
A leaked document of what is supposedly a draft bill covering the crypto industry is now circulating on social platforms. The 600-page document proposes a raft of regulations covering cryptocurrencies, DeFis, DAOs, stablecoins, and crypto exchanges.
To begin with, crypto entities such as exchanges, DeFi platforms, DAOs, and other cryptocurrency projects require mandatory registration. Henceforth, the industry is to no longer have projects with anonymous or pseudonymous creators.
On the bright side, such a law will effectively reduce the frequency of rug pulls and other fraudulent plays. Nonetheless, there is no certainty that certain innovative projects will not be stifled.
More details on the leaked crypto draft bill
The new bill would also reclassify certain digital assets as commodities. This would effectively place them under the rule of the US Commodity Futures Trading Commission (CFTC). According to the document, such assets are those that provide users with dividends, debt, equity, and profit or revenue of any kind.
As for disclosure, other than registration under legal names, crypto exchanges will also have to bear compliance costs and taxes. On the downside, it is likely users of these platforms will cover these costs under transaction fees.
Additionally, the bill notes that any platform trading as little as one token is categorized as a crypto exchange. Therefore, the rules that apply to such entities could apply to AMMs (automated market makers).
In the event of bankruptcy, exchanges will be required to file, and thereafter refund (not liquidate) all user assets. With this, crypto users would be assured of the safety of their funds and assets even if the platform collapses as was the case with Terra.
Like many other investment platforms, crypto entities will also have to post a Terms of Service agreement on their sites. The agreement will update each time a platform alters its source code. Visitors of a platform will have to tick in that they have read and understood the terms of platform use.
Double-edged sword
Of note, the draft bill proposed various penalties for failure to comply with the guidelines within it. Dogecoin (DOGE) co-founder Billy Markus thinks the bill’s target of crypto exchanges likely puts an end to the “party.”
But even with its toughness, the proposal would bring many benefits to crypto users. It would also provide the much-needed regulatory clarity that has been lacking in the industry for way too long. The regulations might also serve as a reference point for other jurisdictions seeking to develop crypto laws.
Twitter user @bot_slam was the first to share the leaked bill. The document will likely undergo scrutiny and voting before a final law is passed.
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