Bill Overview
Title: Digital Trading Clarity Act of 2022
Description: This bill establishes a safe harbor from securities regulation for certain digital asset exchanges and intermediaries. This safe harbor applies if (1) such digital asset is not classified as a security by the Securities and Exchange Commission (SEC) or by a U.S. court; and (2) the exchange or intermediary complies with requirements regarding listings, customer protection, and disclosures. If a digital asset is determined to be a security and otherwise meets these requirements, the exchange or intermediary has a two year period during which the SEC may not pursue specified enforcement activity against the exchange or intermediary.
Sponsors: Sen. Hagerty, Bill [R-TN]
Target Audience
Population: People involved in digital asset exchange transactions globally
Estimated Size: 50000000
- The legislation primarily affects digital asset exchanges and intermediaries, as it creates a safe harbor concerning SEC securities regulation.
- Investors in digital assets may also be indirectly impacted as the exchanges they use gain clearer regulatory guidance.
- Given the growth of digital asset investments, nearly every individual holding investments could potentially be exposed to digital assets, directly or indirectly.
- The bill has global implications as digital asset markets and exchanges operate internationally, impacting users beyond the US.
Reasoning
- The legislation primarily affects digital asset exchanges and intermediaries, as it offers a safe harbor against SEC securities regulation.
- Investors in digital assets may be indirectly impacted as the exchanges they use gain clearer regulatory status.
- Given the rapid growth of digital asset markets, a large portion of the population could potentially be exposed to digital assets through direct investments or indirectly through broader financial market impacts.
- The bill primarily targets businesses facilitating trades but also influences user experience through enhanced service stability and potential growth of offerings.
Simulated Interviews
Cryptocurrency Trader (New York, NY)
Age: 34 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- This policy will give me more confidence to trade diverse assets.
- It's crucial for the growth of crypto exchanges in the U.S.
- However, the two-year safe harbor might be too short to stabilize the environment.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 6 |
| Year 3 | 9 | 5 |
| Year 5 | 9 | 5 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 4 |
Software Developer (San Francisco, CA)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 15/20
Statement of Opinion:
- I believe this will drive innovation in the industry.
- Our company can now focus more on development than regulatory uncertainties.
- It should encourage more talent to enter the field.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 6 | 3 |
| Year 20 | 5 | 3 |
Financial Advisor (Miami, FL)
Age: 45 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 18/20
Statement of Opinion:
- I'm skeptical about digital assets and don't think this policy addresses all risks.
- Clarity is good, but more regulations are needed for investor protection.
- Clients might feel more secure, though.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 4 | 3 |
| Year 20 | 4 | 3 |
IT Project Manager in Finance (Denver, CO)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 7.0 years
Commonness: 10/20
Statement of Opinion:
- The policy might push banks to innovate faster.
- I'm concerned about potential missed opportunities if my bank doesn't adapt.
- Generally cautious optimism about increased investments.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Freelance Graphic Designer (Austin, TX)
Age: 31 | Gender: other
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 14/20
Statement of Opinion:
- I'm hopeful this policy will reduce transaction fees indirectly.
- Digital art relies on crypto ease of transaction.
- Not sure how it'll impact prices of digital assets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 6 | 7 |
| Year 20 | 5 | 6 |
Regulatory Consultant (Chicago, IL)
Age: 56 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 3.0 years
Commonness: 7/20
Statement of Opinion:
- This adds complexity in understanding compliance for exchanges I work with.
- A mixed bag; clarity is good, but it's narrow in scope.
- Clients are relieved, but wary.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 3 |
| Year 10 | 4 | 3 |
| Year 20 | 4 | 3 |
Retail Investor (Seattle, WA)
Age: 47 | Gender: male
Wellbeing Before Policy: 4
Duration of Impact: 10.0 years
Commonness: 11/20
Statement of Opinion:
- This bill gives me more confidence to explore crypto further.
- I hope it leads to better and varied investment options.
- Not fully confident yet due to market volatility.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 3 |
| Year 5 | 7 | 3 |
| Year 10 | 6 | 2 |
| Year 20 | 5 | 2 |
Real Estate Investor (Dallas, TX)
Age: 62 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- Hoping this increases my crypto portfolio value.
- Regulation needs to be balanced to not stifle innovation.
- I'm cautiously optimistic.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 4 |
| Year 5 | 5 | 4 |
| Year 10 | 4 | 3 |
| Year 20 | 4 | 3 |
Economics Professor (Boston, MA)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 2.0 years
Commonness: 5/20
Statement of Opinion:
- A step towards necessary digital regulation framework.
- This will serve as a case study for future policies.
- Not inclusive of all stakeholder concerns.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 6 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
College Student (Portland, OR)
Age: 22 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 17/20
Statement of Opinion:
- Expecting more internships or jobs in the crypto space.
- Peers are excited about potential startup opportunities.
- Uncertain about long-term implications on traditional finance.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 4 |
| Year 20 | 5 | 4 |
Cost Estimates
Year 1: $5000000 (Low: $3000000, High: $8000000)
Year 2: $3000000 (Low: $2000000, High: $5000000)
Year 3: $0 (Low: $0, High: $0)
Year 5: $0 (Low: $0, High: $0)
Year 10: $0 (Low: $0, High: $0)
Year 100: $0 (Low: $0, High: $0)
Key Considerations
- The administrative cost to set up the regulatory framework is not ongoing, with compliance costs mainly falling on private entities.
- The regulatory clarity provided by the bill could deter legal actions and spur economic activities in digital markets, affecting GDP and tax revenues positively.
- The extension of the two-year non-enforcement period for exchanges could boost market confidence and participation in digital asset trading.