- The new Senate bill makes it clear that the SEC should only check securities
- The legislation specifically names bitcoin and ether, but notes that other commodities should fall under the CFTC regulation
If a group of bipartisan senators can pull it off, the Commodity Futures Trading Commission (CFTC) could soon become the regulatory body tasked with overseeing bitcoin and ether.
Sens. Debbie Stabenow, D-Mich., And John Boozman, R-Ark., Wrote the bill, dubbed the Digital Commodities Consumer Protection Act, and introduced it Wednesday.
The legislation clarifies that bitcoin and ether are classified as commodities, as opposed to securities, which would place them under the control of the Securities and Exchange Commission (SEC). The bill does not mention any other tokens or provide criteria for classification.
Exchanges that allow investors to trade bitcoin and ether must also register with the CFTC, the banknotes.
The SEC, which is about six times the size of the CFTC, will continue to scrutinize some aspects of the governance of the cryptocurrency industry, but the bill doesn’t specify exactly what this division of responsibility will look like.
The bill also introduces new registration categories including “digital commodity broker”, “digital commodity keeper”, “digital commodity trader” and “digital commodity trading facility”. Mining alone is not enough to activate registration as a digital asset platform, notes the bill, highlighting an issue raised in previous cryptocurrency bills.
“Digital assets and blockchain technology already have, and will continue to change the way global markets work,” Senator Boozman said in a statement. “However, this fast-growing industry is currently largely governed by a patchwork of state-level regulations.”
The Digital Commodities Consumer Protection Act also commissions a report to examine the racial, gender and economic demographics of those who use digital assets.
“The data shows that those with no bank account, credit card or pension are turning to cryptocurrencies,” said Sheila Warren, CEO of the Crypto Council for Innovation, an advocacy group of industry members who engage with authorities. regulatory. You told Blockworks that the next steps “require a thoughtful approach to engaging people and rebuilding trust.”
The legislation comes as the jurisdictional battle between the CFTC and the SEC continues to unfold.
In a complaint about insider trading by a former Coinbase product manager, the SEC classifies nine crypto tokens (AMP, RLY, DDX, XYO, RGT, LCX, POWR, DFX, and KROM) as stocks. Coinbase has therefore petitioned the regulator to “adopt rules to govern the regulation of securities offered and traded through digital native methods”.
“The SEC and the CFTC are tasked with doing what they believe is best for the American consumer,” Warren said. “Agencies need legislative guidance. Lawmakers largely understand that there is room for either agency depending on what is happening with a digital asset – the details matter. ”
The bill echoes similar language first introduced in previous legislation. Sens. Cynthia Lummis, R-Wyo., And Kirsten Gillibrand, DN.Y., presented their long-awaited Responsible Financial Innovation Act in June.
That legislation, which Senators called the “first full cryptographic bill,” defined many cryptographic tokens as “ancillary assets” or an “intangible and fungible asset that is offered, sold, or otherwise provided to a person in connection with the buying and selling a security through an agreement or scheme that constitutes an investment contract.
This broader asset class would fall under the jurisdiction of the CFTC, as opposed to the SEC, unless otherwise determined by a court.
“The ongoing territory war between federal regulators to oversee the industry has been an obstacle to the industry’s growth potential and has also made the introduction of regulation inefficient and slow,” said David Carlisle, head of political and regulatory affairs of Elliptic.
“By putting most supervisors under the mandate of the CFTC, the bill will help simplify the currently fragmented regulatory landscape and put the United States in a better position to foster innovation while ensuring more effective regulatory oversight.” .
The next step for the bill is the assignment to another commission. If it survives the markup stage, it will be debated and voted on in the Senate before passing the House, if approved.
The Senate goes on hiatus at the end of the week and resumes after Labor Day. Given the upcoming election season, lobbyists are unsure whether any cryptocurrency-related legislation will make it through before the end of the year.
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