Bitcoin And Ether To Be Regulated As Commodities By CFTC Under New Senate Bill• August 4, 2022 9:54 pm • Comments
A new senate bill was just proposed which aims to make Bitcoin and Ether be regulated as commodities by the CFTC instead of the SEC.
This new proposed bill is called the Digital Commodities Consumer Protection Act which was introduced by a group of bi-partisan senators last Wednesday.
The bill only specifically mentions Bitcoin and Ether as commodities, but does not classify any other crypto tokens which leaves a lot of questions unanswered in terms of how the rest of the crypto industry gets treated.
If this bill actually does get passed, it would mean that exchanges that allow for trading of Bitcoin and Ether would have to register with the CFTC as well.
A new bill in the Senate Agriculture Committee would give the @CFTC clearer jurisdiction over some cryptocurrencies – but it stops short of specifying how wide this jurisdiction actually is.@jesseahamilton reportshttps://t.co/A0D78OyVBX
— CoinDesk (@CoinDesk) August 3, 2022
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 other tokens or provide criteria for classification.
Exchanges that enable investors to trade bitcoin and ether must also register with the CFTC, the bill notes.
The SEC, which is roughly six times the size of the CFTC, will still control some aspects of governance over the crypto industry, but the bill does not detail exactly what this division of responsibilities will look like.
The bill also introduces new categories of registration including “digital commodity broker,” “digital commodity custodian,” “digital commodity dealer” and “digital commodity trading facility.”
Mining activity, alone, is not sufficient to trigger registration as a digital commodity platform, the bill notes, highlighting an issue raised in previous crypto law proposals.
Reasoning for this bill includes the objective of trying to centralize crypto regulations which are largely regulations at the state level right now.
In terms of what this means for how the crypto industry will be regulated, it seems that there would be shared responsibilities between the CFTC and SEC.
Currently, the SEC is about 6 times the size of the CFTC and has been criticized for its over-regulatory actions which has slowed down growth of the industry.
The rise of the CFTC would certainly help limit the reach of the SEC which would be positive for the crypto industry as a whole.
With that being said, many are wondering why Bitcoin and Ether get special treatment while other digital assets may get accused of being securities.
A push in Washington to transform the CFTC into a top crypto watchdog is gaining steam with a Senate bill that would give it sweeping new powers to oversee the asset class https://t.co/Zt2Zo3dIWi
— Bloomberg Crypto (@crypto) August 3, 2022
“The ongoing turf war among federal regulators for oversight of the sector has been a hindrance to the industry’s growth potential, and has also made rolling out regulation inefficient and slow,” David Carlisle, head of policy and regulatory affairs at Elliptic, said.
“By placing most supervisory authorities under the CFTC’s remit, the bill will help to streamline the currently fragmented regulatory landscape and will put the US in a better position to both foster innovation while ensuring more effective regulatory oversight.”
The next step for the bill is to be assigned to another committee. If it survives the markup stage, it will be debated and voted on in the Senate before moving to the House, if passed.
The Senate goes on recess at the end of the week and resumes after Labor Day. Given the upcoming election season, lobbyists are uncertain whether any crypto-related legislation will make it through before the end of the year.
Senate Bill Would Give CFTC ‘Exclusive Oversight’ of Bitcoin and Ethereum.
— Kyrill Krystallis (@mrkrystallis) August 3, 2022
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