Why Market Structure Bills Are “More Complex” than Genius Act

Recent developments in Congress and comments from the senators show that market structure bills are not as easy as genius acts.

Clarity of clarity?

Before Fed Chairman Jerome Powell was in the Jackson Hole spotlight on Friday, other big names from the same valley gave us some regulations to bite.

U.S. Sen. Tim Scott and SEC Chairman Paul Atkins shared the kind of admiration you’d expect from Republican leaders and agency managers appointed by the president. The United States will be the “crypto capital of the world” and the yadayadayada.

But there were some more substantial soundbites between the lines.
For example, Scott, chairman of the Senate Banking Committee, dealt with market structure laws. Perhaps Scott, Cynthia Ramis and others have recall introducing a “discussion draft” based on an act of clarity passed in the House last month.

It appears to define “additional assets” to clarify which digital assets are not securities. The SEC has directed that “adjust existing requirements to suit digital asset activities.”

Eighteen Democrats voted for the Genius Act. Scott said he believes that 12-18 DEMs are open to voting at least for the Market Structure Bill.

But he admits that it is “a much more complicated law,” and in his words, it is “a real power to overcome” that people like Senator Elizabeth Warren are in the way of wanting to participate.

Patrick Dorgerty, head of blockchain and digital assets at law firm Foley & Lardner, agreed that the legislative effort is not certain. He also highlighted the difference between what the House passed and what the Senate Banking Committee revealed.

Transparency, for example, helps Layer-1 blockchain builders to raise funds more efficiently and protect them from failing to register with the SEC, the lawyer told me. Crypto exchanges are also secure from attacks to trade unregistered tokens.

Side note: On the contrary, the leader of a crypto project may have to dodge an overly friendly commissioner who wants to drink coffee near his hometown.

This clear law gives both SEC and CFTC jurisdiction over certain parts of the industry. Regulations on this technology can be moved from one institution to another, Daugherty added.

Scott’s proposal puts more rules and regulatory burdens in the SEC. However, it should be noted that the Senate Agriculture Committee is expected to soon introduce its own draft language focused on digital products with CFTC oversight.

“If enacted, either market structure law requires considerable rulemaking and interpretation by securities bars that are closely advancing with the SEC,” Daugherty said. “Does Clarity make the law clear? Yes, but fewer than some.”

Atkins doubles with the “Super-App” approach

Atkins typing some of his “project code” priorities into the house in discussions later that morning. If you forget the key points of the extensive planning of the SEC Chair:

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Atkins also said in his July 31 statement that he would help the Senate develop a market structure bill.

He then said Tuesday: “I didn’t come to Washington to take part in the Battle of the Lawn.”

He doubled the theme of being flexible as markets and technology evolved, and implementing what is called super approach.

“Five or 10 years from now, things will be completely different,” Atkins said. “And we can’t put things in our unchanging little cement slope pockets.”

He pointed out that a balance between friendly competition and power is important. Partly to protect one regulator from becoming “too stubborn.”