U.S. House of Representatives' crypto draft is released: digital assets are clearly defined, regulatory gaps are to be filled

‍On May 5, leaders of the U.S. House Financial Services Committee and the Agriculture Committee released a draft discussion outlining a federal framework for regulating the U.S. Crypto asset industry.

House Financial Services Committee Chairman French Hill (Republican, Arkansas), Agricultural Commission Chairman Glenn “GT” Thompson (Republican, Pennsylvania), Financial Services Commission Digital Assets Subcommittee Bryan Steil (Republican, Wisconsin), and Agricultural Commission Commodity Markets Subcommittee Dusty Johnson (Republican, South Dakota) jointly released the draft legislation.

These legislators stressed that the bill aims to coordinate regulatory responsibilities between the SEC and the Commodity Futures Trading Commission (CFTC), while providing legal definitions for key terms in the blockchain and Crypto asset markets.

"The draft discussion further develops on the progress made by both parties and both houses of the 118th Congress, providing a lasting framework for protecting consumers and maintaining U.S. leadership in the field of digital innovation," said Chairman Hill.

He also added that the committee intends to absorb public feedback and work with the Donald Trump administration to promote the enactment and implementation of the final bill.

Digital Asset Classification

This legislation introduces the definition of core industry concepts, including digital goods, blockchain systems, decentralized governance, stablecoins approved for payment, and mature blockchain systems.

In addition, the draft also clearly stipulates that distributions made through Mining, pledge or user rewards, that is, "end user allocation", do not belong to securities or constitute sales under the current law.

Chairman Thompson stressed the clear urgency of legislation, noting that the proposed framework would fill regulatory gaps and provide developers and users with the certainty they have long called for.

The draft sets a registration pathway for digital commodity exchanges, brokers and traders under the CFTC regulation, while allowing the SEC to retain jurisdiction over securities and certain mixed assets. Entities engaged in custody functions, transaction-driven or interacting with clients must follow the newly defined registration and disclosure procedures.

"This is the beginning of a golden age for digital assets, and the House is leading the trend," said Steil, the subcommittee chairman.

Johnson agrees with this view, saying that the United States must provide a common sense regulatory system in order to continue to maintain its position as a global center for investment and innovation in Crypto assets.

The draft also retains protections for DeFi protocols and self-hosting. It stipulates that as long as the DeFi transaction protocol and messaging system do not custody or exercise discretion on user funds, there is no need to comply with traditional financial regulations.

The bill also prohibits the Ministry of Finance or the Financial Crime Enforcement Network (FinCEN) from introducing rules that limit individuals’ ability to self-host Crypto assets through their wallets.

Start the legislative process

The Commission has scheduled a joint hearing on May 6 on the theme of “The Future of Innovation and Digital Assets in America: Blueprint for the 21st Century”, aiming to initiate formal legislative discussions and gather stakeholder input.

The draft contains provisions on the joint formulation of rules between the SEC and CFTC and research on DeFi, NFT and blockchain infrastructure by expanding the innovative office functions of federal agencies.

By establishing legal definitions and clear jurisdictional boundaries, the proposed bill aims to eliminate uncertainty in the United States regarding Crypto asset regulation while encouraging responsible development and regulation of the digital asset market.