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The DAMS Bill: A Beacon of Hope for the Crypto Industry
Emerging from the turbulence of regulatory uncertainty, a groundbreaking bill stands ready to set a new course for the cryptocurrency industry.
The United States Republican Party has been in the limelight recently by introducing a new, groundbreaking cryptocurrency legislation known as the "Digital Asset Market Structure" (DAMS) bill. The bill, introduced on June 1, 2023, has been hailed by key figures in the crypto industry as a significant leap forward in regulating digital assets.
The Promise of the DAMS Bill
Messari CEO Ryan Selkis, speaking at a Coinbase-hosted event on Twitter Spaces, has lauded the bill as a "10x improvement" on all other crypto bills introduced to the United States Congress. The DAMS bill aims to establish a framework to fill the regulatory gaps between the U.S. Commodity Futures Trading Commission (CFTC) and Securities Exchange Commission (SEC) concerning crypto-assets. Selkis remarked that the bill lays out a pathway for tokens to reach compliance through decentralization without immediately triggering securities laws1.
Acknowledging Past Efforts:
Drawing attention to the efforts of former SEC Chair Hester Pierce, who released a "Safe Harbor" proposal in February 2020, Selkis acknowledged the similarities between Pierce's proposal and the DAMS bill. The language from Pierce's proposal has been incorporated into the legislative text of the DAMS bill, marking a significant development in crypto regulation1.
Addressing the Challenges for Token Issuers
TuongVy Le, head of regulatory and policy at Bain Capital Crypto, echoed Selkis's sentiments, pointing out that the DAMS bill provides a practical route for token issuers to work towards compliance. Le emphasized that token issuers need time to achieve decentralization, during which they remain susceptible to enforcement actions by the SEC. The DAMS bill, she believes, addresses this fundamental issue and provides a thoughtful solution for token issuers2.
Paul Grewal, the chief legal officer at Coinbase, further accentuated the challenges token issuers face under the current regulatory framework. He noted that there is no reasonable pathway for assets that initially start as securities to evolve and decentralize within the confines of the law. The DAMS bill seeks to rectify this by creating an environment where such assets can flourish and comply with regulations2.
Recent SEC Actions and the Role of DAMS Bill
The introduction of the DAMS bill is particularly significant given the recent lawsuits filed by the SEC against the two largest cryptocurrency exchanges — Binance on June 5 and Coinbase on June 6. These lawsuits accuse the exchanges of breaking securities laws by offering tokens as unregistered securities. With the SEC now classifying at least 67 cryptocurrencies as securities, the DAMS bill could be instrumental in establishing a clearer regulatory framework for the industry.
Conclusion: Towards a Cohesive Crypto Regulatory Environment
In conclusion, the DAMS bill holds promise for the future of crypto regulation in the United States. By acknowledging the efforts of former SEC Chair Hester Pierce, offering a pathway to compliance through decentralization, and addressing the challenges faced by token issuers, the bill brings hope for a more cohesive and practical regulatory environment. The crypto industry continues to evolve rapidly, and the DAMS bill represents a crucial step towards fostering innovation while ensuring adherence to necessary regulatory standards.