New Bill Proposes SEC-CFTC Collaboration to Strengthen Digital Asset Regulation

In a bid to foster innovation while ensuring robust oversight of digital assets, U.S. Representative John Rose (R-TN) has introduced a new bill, the Bridging Regulation and Innovation for Digital Global and Electronic Digital Assets Act (BRIDGE Act).

The legislation seeks to establish a formal collaboration between two key financial regulatory agencies: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

By creating a Joint Advisory Committee (JAC), the bill aims to bring both regulators and private sector stakeholders together to form a balanced regulatory framework for digital assets. Rep. Rose argues that current regulatory enforcement measures are pushing innovation and investment abroad, stifling the U.S.’s ability to remain competitive in the rapidly growing digital asset space.

The BRIDGE Act: A Call for Collaborative Regulation

The BRIDGE Act proposes the formation of a Joint Advisory Committee (JAC) that will include members from the SEC, CFTC, and private sector experts. According to Rep. Rose, this committee is crucial for crafting sensible and flexible regulations that will allow digital assets to flourish within the U.S. while providing adequate investor protection.

Rose emphasized the need for a regulatory environment that encourages, rather than stifles, growth. “The current heavy-handed, regulation-by-enforcement approach isn’t working and is instead encouraging investment in this key innovation overseas,” he said.

By contrast, the BRIDGE Act is designed to foster collaboration, where both regulatory agencies can work alongside industry leaders to develop policies that address the unique aspects of digital assets.

The JAC will serve as an advisory body for both the SEC and CFTC, helping them navigate the complexities of digital assets and ensure regulations are fair, up-to-date, and supportive of innovation.

Structure and Role of the Joint Advisory Committee (JAC)

The Joint Advisory Committee will consist of 20 members—10 from the SEC and 10 from the CFTC—each serving two-year terms. These members will represent a diverse array of interests within the digital asset space, including stakeholders from the private sector, technology firms, legal experts, and financial institutions.

The JAC’s key role is to advise both regulatory bodies on their rules, policies, and regulations concerning digital assets. By providing insights from various industry perspectives, the committee will work to create a more cohesive regulatory environment that reflects the needs of the digital asset market.

• Membership and Terms: JAC members will be appointed for two-year terms, meeting at least twice annually. While they will not receive compensation, members may be reimbursed for travel expenses related to committee activities.
• Ongoing Advisory Role: The advisory body is not a temporary committee but is designed to persist as long as necessary to address the evolving landscape of digital assets and ensure regulations adapt to market changes.

Potential Impact on the Digital Asset Industry

The introduction of the BRIDGE Act comes at a critical time when many digital asset companies are relocating outside the U.S. due to what they see as an overly rigid regulatory framework. The proposed Joint Advisory Committee offers a new approach by encouraging dialogue between regulators and the private sector. This could lead to more flexible regulations, helping the U.S. remain competitive in the global digital asset market.

By fostering collaboration, the BRIDGE Act could help shift the focus from punitive enforcement to proactive regulation that supports growth and innovation. The legislation also underscores the importance of government-private sector cooperation, especially in a rapidly evolving space like digital assets.

Conclusion: A New Era for Digital Asset Regulation?

The BRIDGE Act represents a significant shift in how the U.S. approaches digital asset regulation. By uniting the SEC and CFTC with industry stakeholders, this bill seeks to create a more dynamic, flexible regulatory framework that fosters innovation while maintaining essential protections for investors.

The proposed Joint Advisory Committee will play a central role in advising both regulators, potentially paving the way for a more balanced approach to digital asset regulation in the U.S.