In the rapidly changing world of digital assets, especially non-fungible tokens (NFT), We begin to gain some clarity about their future. Authors and regulators also speculate when and how NFTs will be regulated. The bill proposed by the US Senate provides insight into how the federal government seeks to regulate NFTs and other digital assets and vehicles.
Responsible Financial Innovation Act
Guardrails are proposed to be placed around the growing digital asset industry. Responsible Financial Innovation ActMost of the digital assets (including NFTs), led by Senators Kristen Gillibrand and Cynthia Lummis, propose to be classified as commodities (wheat, oil, steel, etc.) rather than securities. Oversight responsibility rests with the Commodity Futures Trading Commission (CFTC), not the Securities and Exchange Commission (SEC).
A few months ago, the SEC said: “NFT is for trading Investment contract.. Even if NFTs are set up to be treated as commodities, the SEC is within the scope of fractional NFTs (f-NFTs) based on the view that they can be used to raise funds in traditional security methods. (Packaging f -NFT allows publishers to sell parts of the NFT).
The CFTC was created to regulate the commodity futures and options markets. Its mission is to protect market participants and the general public from fraud, abuse, and systemic risks associated with derivatives that are the subject of derivatives. Commodity Exchange Law (CEA). Assigning responsibility to CTFCs is a surprise to some and can change the way companies enter new areas of digital assets to do business.
This bill is the first proposal to build a market for digital assets with the long-awaited legal definition. This proposal creates a complete regulatory framework for digital assets and encourages responsible financial innovation, flexibility, transparency, and strong consumer protection while integrating digital assets into existing legislation.
The bill defines digital assets as “essentially electronic assets that grant economic or proprietary access or authority, including cryptocurrencies and stablecoins for payment.” Cryptocurrencies and other digital coins are treated like traditional securities under the supervision of the SEC unless they give the owner the privileges that corporate investors enjoy, such as dividends, clearing rights, and the monetary interests of the issuer. It explicitly states that there is no such thing.
NFT as a product
Goods include all goods and goods, services, rights, and interests covered by contracts for future deliveries or offers. In general, the main terms of a futures contract are (1) a contract to purchase or sell goods for future delivery, (2) a contract at a price determined at the time of the contract, and (3) a contract to be fulfilled by: included.Physical delivery, (4) must be settled prior to the delivery date and traded or exchanged by individuals and businesses registered in (5) CFTC..
This raises the question of what “physical delivery” means in the context of NFTs. It can also have different impacts, whether you have additional assets connected to the NFT or you are referencing the NFT itself. NFTs can eventually become futures, futures, or swaps, even if the represented asset is not. A forward contract allows a party to buy or sell an asset at a price specified on a future date and is typically used for hedging. The same is true for futures contracts, which are contracts to buy or sell certain commodities at a given price in the future, and positions are closed daily. Finally, a swap agreement is when the parties agree to trade fluctuating performance for a fixed market rate.
If an NFT is considered a commodity, CEA can be applied in one of two ways. First, CEA’s general prohibitions on deceptive and operational transactions may apply to NFT transactions that are conducted as fully funded, unleveraged transactions (if there is no debt). This enhances the protection of NFT transactions due to the inquiries, diligence, and disclosure obligations imposed on sellers. If the NFT is offered on a margin or leverage basis (if the seller can trade a position larger than the amount in the trading account), add requirements such as trading NFT only on registered derivative exchanges unless there is a trade. The requirements apply. It meets the exception that “physical delivery” takes place within 28 days of the transaction date.
The digital asset industry is constantly evolving, and Congress’s goal is to create legislation that promotes innovation while protecting consumers from fraud, misinformation, and consequent market volatility. CFTC (which regulates NFTs) oversees the purchase and sale of raw goods. The bill is for all digital asset issuers to (1) maintain high quality liquid assets worth 100% of all outstanding denominations, and (2) assets and their value that support stable coins. There is financial support for disclosing relevant information and (3) redeeming all outstanding stablecoin payments at face value.
The impact of the bill is widespread. Due to its size and complexity, lawmakers may need to pass the component apart over time. Anyway, the bill provides the very necessary clarity of how Congress has been discussing the regulation of goods, and companies and issuers interested in providing preparations for upcoming regulation and oversight. make it possible.