The two agencies have been campaigning for greater authority over digital assets, helping to create confusion in Washington about how to classify and regulate cryptocurrencies and the economy that has sprung up around them. The bill aims to provide some clarity by considering both bitcoin and ethereum as commodities, which together account for around two-thirds of the cryptocurrency market.
This would subject bitcoin and ethereum to regulation by the CFTC, which already oversees futures markets for both. And online platforms that allow investors to trade digital tokens, such as Coinbase, should register with the agency.
Stabenow, chair of the Senate Agriculture Committee, which oversees the CFTC, said in a statement that cryptocurrency markets “lack the transparency and accountability” that investors have come to expect from traditional financial markets. “That’s why we are closing regulatory gaps and requiring these markets to operate under simple rules that protect customers and keep our financial system secure.”
In addition to Boozman, the top Republican on the Agriculture Committee, two other members of the jury, Sens. Cory Booker (DN.J.) and John Thune (RS.D.), are co-sponsoring the measure. Stabenow said in a press conference on Wednesday that the commission could revise the bill as early as September.
The bill joins an increasingly crowded field of legislative proposals to regulate the trillion-dollar digital asset market, a priority that has taken on greater urgency after recent implosions of several high-profile crypto projects have devastated dozens of thousands of retail investors. Leaders of the House Financial Services Commission are working with the Treasury Department on a bill to put stablecoin issuers under banking supervision, though they canceled plans for a quick markup at the end of last month. ongoing differences with the draft.
And the Sens. Cynthia M. Lummis (R-Wyo.) And Kirsten Gillibrand (DN.Y.) in June unveiled what they announced as a global plan to regulate the industry. Their proposal has entrusted the primary responsibility of the industry to the CFTC, but unlike the Stabenow and Boozman bill, it would make the registration of cryptocurrency exchanges with the agency optional.
The cryptocurrency industry gets a big win under the long-awaited Senate bill
Both bills would allow the CFTC to assess fees on cryptocurrency industry operators to fund an expanded budget. The agency, about one-sixth the size of the SEC, is already tasked with overseeing a slice of financial markets, from wheat and oil futures to more complex products.
Cryptocurrency interests have been lobbying lawmakers for months to give the CFTC the role of their primary regulator. They say the regulator would give them a friendlier treatment than the SEC, where President Gary Gensler has taken an aggressive public line towards the industry.
Boozman, in a press conference on Wednesday, said the industry “almost universally” prefers to be regulated primarily by the CFTC, a fact that he believes will ease the path of the measure in the Senate. “It makes it so much easier for members when you don’t have friends who are all over the place,” he said.
Likewise, CFTC President Rostin Behnam plays a bigger role for his agency. In a speech to the Brookings Institution last month, he said federal and state regulators who share responsibility in a “blanket patchwork” approach are “proving increasingly inadequate” as the cryptocurrency market evolves rapidly. .
A SEC spokesperson declined to comment on the bill; the CFTC did not respond to a request for comment.
Stabenow and Boozman said the two agencies must share oversight responsibilities and coordinate how to do this. “We are not defining what a security is,” Stabenow said. “I have great faith that President Gensler can use his authority … We are not trying to go beyond our jurisdiction.”
The proposal is attracting the industry’s first positive reviews and at least one consumer advocate. Blockchain Association Executive Director Kristin Smith said in a statement she was encouraged to see “the bipartisan desire to give the CFTC the clarity she needs to oversee spot cryptocurrency markets.”
And Todd Phillips, director of financial regulation and corporate governance at the Center for American Progress, called the Stabenow-Boozman proposal “a very good bill.”
“It provides a regulatory framework for cryptocurrencies without taking authority away from other agencies, such as the SEC,” he said in an interview. “It specifically requires the registration and regulation of brokers, puts in place investor protection rules and creates a framework around this market to ensure that investors are not exploited.”