Two influential U.S. Senate Committee members have introduced legislation that would place Bitcoin, Ethereum, and other digital assets under the supervision of the Commodities Futures Trading Commission (CFTC).
The Digital Commodities Consumer Protection Act of 2022, sponsored by Michigan Senator Debbie Stabenow and high-ranking Republican John Boozman, seeks to expand the regulatory scope beyond the CFTC, potentially putting an end to the protracted dispute between federal agencies over who should regulate digital assets.
Despite the fact that the market for digital assets has grown exponentially over the last 13 years, it has remained mostly unregulated, leaving investors vulnerable to financial fraud and market manipulation.
Federal authorities like as the SEC, CFTC, and DOJ have found themselves mired in a regulatory rabbit hole resulting in “regulation by enforcement” as they strive to erect guardrails for the emerging sector, causing concern and uncertainty among industry participants.
The law, which was introduced on Wednesday, “seeks to exclude securities from the definition of digital commodities,” clarifying the nature of securities. In addition, it will confirm the function of the SEC, which has been fighting numerous cryptoassets utilizing the securities card.
The SEC has been criticized for allegedly “stifling innovation” in the digital asset industry. Chairman Gary Gensler emphasized last week in a video that Cryptocurrencies should be governed by securities legislation, noting that “we should be technology agnostic when it comes to investor safety.”
Rostin Behnam, head of the Commodity Futures Trading Commission (CFTC), has intensified lobbying efforts to have his agency become the major spot market regulator, declaring last week that the CFTC was “equipped and well positioned” to manage spot markets for several cryptocurrencies.
Due to its precise wording on securities, this law is more likely to pass in the Senate than crypto-related legislation proposed in recent months, according to sources. Its proponents also belong to the Senate Agriculture Committee, which earlier this year urged the CFTC to provide more comprehensive advice on crypto assets.
Moreover, because industry participants believe it is simpler to comply with the CFTC than with the SEC, different crypto businesses such as Coinbase, Ripple, and FTX have been vigorously urging Congress to establish a new digital asset category and authorize the CFTC to regulate it.