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Patrick McHenry– Republican House representative and ranking member of the House Financial Services Committee– continues fighting for the cryptocurrency industry. He recently presented a safe harbor bill designed to protect crypto-related startups from securities regulators.
The Clarity for Digital Tokens Act of 2021
McHenry’s bill was unveiled on Tuesday, before a committee hearing with SEC chairman Gary Genser. The proposed legislation seeks to “provide a safe harbor for transactions in certain tokens and other purposes.” It has been titled “The Clarity for Digital Tokens Act of 2021”.
The bill outlines specific criteria for digital token distributors that would exempt them from an SEC lawsuit if met. These criteria include the promise for blockchain startups to reach network maturity within three years. Tokens must also have “the purpose of facilitating access to, participation on, or the development of the network.”
As for disclosure requirements, development teams must present their source code, transaction history, and tokenomics on a publicly accessible website.
In general, McHenry’s proposal echoes the Token Safe Harbour proposal presented by “crypto-mom” Hester Pierce this year– with added provisions.
The representative says that the regulatory framework currently in place threatens to push the crypto industry overseas. His bill seeks to stop that from happening.
My bill, which builds on the great work of SEC Commissioner Hester Peirce, will help provide the necessary legal certainty to digital asset projects when they launch.
Steps Toward Regulatory Clarity
Regulatory clarity has been in high demand from both the crypto industry and crypto-friendly politicians alike. Senator Pat Toomey– another pro-crypto politician– sent a direct letter to chairman Gensler last month seeking precisely that. He says that it shouldn’t take enforcement actions on the industry until that clarity is provided.
So far, Hester Pierce has expressed her disappointment with the United States on this front. She said that the commission has failed to provide clarity to the industry for three years now. She calls it a huge “barrier to the industry.”
Chairman Gensler has paid much lip service to ensure that the proper “investor protections” are in place before approving any projects. However, patience both inside and outside of parliament is wearing thin.
Recently, the SEC delayed yet another round of Bitcoin ETF proposals until well after October. One of these was a Bitcoin-Futures ETF, which Gensler said is more likely to receive approval. However, there are still no guarantees in this regard.