Two top-ranking members of the U.S Senate Committee have proposed legislation that could see Bitcoin, Ethereum, and other digital assets fall under the oversight of the Commodities Futures Trading Commission (CFTC).
The Digital Commodities Consumer Protection Act of 2022, fronted by Senator Debbie Stabenow of Michigan and top-ranking Republican John Boozman, seeks to expand the regulatory scope beyond the CFTC, potentially ending the long-drawn-out tussle between federal agencies over who should police digital assets.
Despite the digital asset market outgrowing itself in the past 13 years, it has remained largely unregulated, exposing investors to financial fraud and market manipulation. Federal agencies such as the SEC, CFTC and the DOJ have also found themselves trapped in a regulatory rabbit hole resulting in “regulation by enforcement” as they seek to put up guardrails for the nascent sector, creating anxiety and confusion among industry players in the process.
The bill, unveiled on Wednesday, “seeks to exclude securities from the definition of digital commodities”, clearing the air around what constitutes a security. It will also affirm the role of the SEC, which has been challenging various crypto-assets using the securities card.
The SEC has come under fire for its alleged role in “stifling innovation” in the digital asset space. Chairman Gary Gensler has insisted that Cryptocurrencies should be regulated under securities regulations, stating in a video last week that “we should be technology neutral when it comes to investor protection.”
Rostin Behnam, CFTC’s chairman, has also been doubling down on lobby efforts to have his agency become the primary spot market regulator stating last week that the CFTC was “ready and well situated” to oversee spot markets for some cryptocurrencies.
According to sources, this bill is more likely to advance in the Senate than crypto-related bills floated in recent months due to its clear-cut language on securities. Its proposers also belong to the Senate Agriculture Committee, the senate group that called on the CFTC to offer more profound guidance on crypto assets earlier this year.
Moreover, with industry players feeling that it is easier to comply under the CFTC than the SEC, various crypto firms such as Coinbase, Ripple and FTX have been aggressively calling for Congress to create another digital asset category to empower the CFTC to enforce it.