Bill Proposes Joint Digital Asset Committee to Unite SEC and CFTC

A new bill introduced by U.S. Representative John Rose proposes creating a Joint Advisory Committee on Digital Assets to improve the collaboration between the SEC and CFTC on digital asset regulation. Rose is advocating for a more crypto-friendly regulatory approach to prevent investment flight overseas. Meanwhile, eToro has settled charges with the SEC for $1.5 million and restricted its U.S operations, while Ryan Salame is seeking to vacate his previous guilty plea. U.S. diplomats are also still urging Nigeria to release detained Binance executive Tigran Gambaryan, whose health has worsened in custody.

New Bill Proposes Joint Digital Asset Committee

John Rose, a member of the U.S. House of Representatives from Tennessee and a Financial Services Committee member, introduced a bill on Sept. 12 that aims to improve the collaboration between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on digital assets. 

The bill is titled the ‘‘Bridging Regulation and Innovation for Digital Global and Electronic Digital Assets Act,’’ and proposes creating a Joint Advisory Committee on Digital Assets. This committee will include members from the digital asset industry, users, and academics, along with representatives from both the SEC and CFTC.

John Jose’s proposed bill

The proposed committee will focus on providing advice to the agencies, and exploring how digital assets and blockchain can improve financial market efficiency and consumer protection. Additionally, the committee will examine methods for quantifying digital assets and make recommendations, to which the agencies may be required to respond publicly. Members of the committee will serve two-year terms and meet at least twice a year.

Rose, who has been an advocate for the crypto industry, stated that the current U.S. regulatory approach is pushing investment overseas. He believes the Joint Advisory Committee will help create a framework for the government and private sector to work together to shape a successful regulatory landscape for digital assets. 

Rose has received an “A” rating from the Coinbase-backed Stand with Crypto political action committee and has consistently supported crypto-friendly legislation, including the Financial Innovation and Technology for the 21st Century Act (FIT21) and the CBDC Anti-Surveillance State Act.

eToro Settles With SEC

In other legal news, eToro has agreed to settle charges with the SEC for operating as an unregistered broker and clearing agency while facilitating trades in crypto assets classified as securities. As part of the settlement, eToro will pay a $1.5 million fine and limit its U.S. operations to offering trades in just three digital assets: Bitcoin (BTC), Bitcoin cash (BCH), and Ethereum (ETH). 

eToro has a relatively small presence in the U.S. market, with only 240,000 customer accounts compared to Coinbase’s 100 million. The settlement still provides at least some insight into how the SEC views the classification of digital assets.

Several legal experts weighed in on the settlement. Joseph Tully, a securities litigation lawyer, pointed out that the SEC’s acceptance of BTC, BCH, and ETH as commodities suggests that these assets are not securities. He did warn that no formal legal guidance has been provided beyond these three. 

Lowell Ness, a partner at Perkins Coie, pointed out the significance of the settlement in light of federal court rulings, and shed some light on a potential gap between regulators’ views and court decisions regarding programmatic trades.

According to Joshua Ashley Klayman from Linklaters, eToro did not admit or deny the SEC’s findings, and the settlement does not provide any clear information on which digital assets the SEC may consider securities. She also warned people against just assuming this settlement will influence future court cases. 

Former SEC lawyer Alexandra Damsker is very disappointed with eToro’s decision to settle. She believes that they missed an opportunity to challenge the SEC’s stance in court and seek a clearer determination on the matter.

Ryan Salame’s FTX Guilty Plea Under Review

There are also some new developments in the case against an ex-FTX executive. Former FTX Digital Markets co-CEO Ryan Salame appeared in a New York courtroom on Sept. 12 as part of a hearing where a federal judge considered his motion to vacate a previous guilty plea related to FTX’s collapse. 

Salame had pleaded guilty to making unlawful political contributions, defrauding the Federal Election Commission, and conspiracy to operate an unlicensed money-transmitting business. During the hearing, Judge Lewis Kaplan questioned whether Salame actually committed perjury as part of the plea.

Salame indicated that he is more than willing to testify about an alleged agreement with prosecutors in hearings or the criminal trial of his partner, Michelle Bond, who is facing campaign finance law violation charges. Judge Kaplan stated he will take the matter under advisement and return with a ruling.

Salame previously pleaded guilty in 2023 and was sentenced to 90 months in prison. He filed a motion to vacate the plea but withdrew it on Aug. 29, claiming he will address the matter in Bond’s case. Salame’s sentence was also initially delayed because of medical issues, but at the Sept. 12 hearing, the judge moved his reporting date to Oct. 11.

Bond and Salame, who are both free on $1 million bail, were ordered to surrender their travel documents. Despite the fact that he finds himself in some hot legal water, Salame has been quite active on social media, and has been making claims about people involved in the FTX scandal. 

Meanwhile, several other former FTX and Alameda Research executives, including Sam Bankman-Fried, Caroline Ellison, Nishad Singh, and Gary Wang, have also faced legal action. Bankman-Fried was sentenced to 25 years in prison, and Ellison is scheduled for sentencing on Sept. 24. Singh and Wang are set to face hearings later this year.

U.S. Pushes for Release of Binance Executive

Meanwhile, United States diplomats have been privately pressuring Nigerian officials to release Binance executive Tigran Gambaryan. The imprisonment has strained diplomatic relations between the two countries, with U.S. Secretary of State Anthony Blinken and Ambassador Richard Mills raising the issue with Nigerian officials. 

Ambassador Mills met with Nigeria’s President Bola Ahmed Tinubu’s cabinet in September of 2024 to push for Gambaryan’s release. However,  Nigeria’s Attorney General insists that he will only be released after a trial.

Gambaryan’s attorneys have urged the U.S. State Department to label him as “wrongfully detained” to increase political pressure on Nigeria. U.S. lawmakers, including Rep. Rich McCormick, have also called for Gambaryan’s detention to be classified as a “hostage” situation, and even alleged that Nigeria is holding him to extort money from Binance.

Gambaryan’s deteriorating health has become a very major concern, and some U.S. officials are labeling his detention a humanitarian issue. Attorneys for Gambaryan filed a new bail motion on Sept. 2, 2024, because of his need for medical attention due to serious health conditions, including a herniated disc, pneumonia, malaria, and throat infections. 

Nigerian prison officials have faced a lot of criticism for neglecting his medical needs, which escalated in July when an arrest warrant was issued for Dr. Abraham Ehizojie, a medical doctor at the Kuje prison facility, for failing to provide a medical report for Gambaryan.