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The Commodity Futures Trading Commission would take the lead role in overseeing the two largest cryptocurrencies and the platforms on which they trade, according to a new bill by Sens. Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.). .
Oversight of the remaining cryptocurrencies would be split between the CFTC and the Securities and Exchange Commission, although the process for those determinations is not yet clear.
The two agencies have been vying for more authority over digital assets, adding to the confusion in Washington over how cryptocurrencies and the economy that has sprung up around them should be classified and regulated. The bill aims to provide some clarity by considering both Bitcoin and Ethereum as commodities, which together make up about two-thirds of the cryptocurrency market.
That would subject Bitcoin and Ethereum to regulation by the CFTC, which already oversees the futures markets for both. And online platforms that allow investors to trade the digital tokens, like Coinbase, would have to register with the agency.
Stabenow — chairman of the Senate Agriculture Committee, which oversees the CFTC — said in a statement that crypto markets “lack the transparency and accountability” that investors have come to expect from traditional financial markets. “That’s why we’re closing regulatory loopholes and demanding that these markets operate on simple rules that protect customers and keep our financial system safe.”
In addition to Boozman, the top Republican on the Agriculture Committee, two other board members, Sens. Cory Booker (DN.J.) and John Thune (RS.D.), are co-sponsoring the measure.
The bill joins an increasingly crowded field of proposed legislation to regulate the trillion-dollar digital asset marketplace, a priority that has gained urgency after recent implosions of several high-profile crypto projects devastated tens of thousands of retail investors. Chairmen of the House Financial Services Committee are working with the Treasury Department on a bill to subject stablecoin issuers to bank-like oversight, though late last month they scrapped plans for a quick boost over ongoing differences with the bill.
And Sens. Cynthia M. Lummis (R-Wyo.) and Kirsten Gillibrand (DN.Y.) revealed in June what they billed as a sweeping plan to regulate the industry. Their proposal gave primary responsibility for the industry to the CFTC, but unlike Stabenow and Boozman’s bill, crypto exchanges would be free to register with the agency.
Both bills would allow the CFTC to levy fees on crypto industry players to fund an expanded budget. The agency, which is about a sixth the size of the SEC, is already tasked with overseeing a range of financial markets, from grain and oil futures to more complex products.
Crypto interests have been lobbying for lawmakers to make the CFTC their top regulator for months. They say the regulator would treat them more kindly than the SEC, where Chairman Gary Gensler has taken an aggressive public line on the industry.
CFTC Chairman Rostin Behnam also advocates a bigger role for his agency. In a speech to the Brookings Institution last month, he said that federal and state regulators, sharing responsibility in a “patchwork” approach, are “increasingly proving insufficient” as the crypto market evolves rapidly.
An SEC spokesman declined to comment on the bill; the CFTC did not respond to a request for comment.
Todd Phillips, director of financial regulation and corporate governance at the liberal think tank Center for American Progress, called the Stabenow-Boozman proposal “a great bill.”
“It provides a regulatory structure for crypto commodities without stripping authority from other agencies like the SEC,” he said in an interview. “In particular, it requires brokers to be registered and regulated, introduce investor protection rules and create a framework around this market to ensure investors are not taken advantage of.”
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