Senators Push For CFTC Control Over Crypto

It appears as if the United States government is in a regulatory feud…

Over the last 2 years, pressure has been mounting between the S.E.C. and the CFTC as to who should preside over the cryptocurrency space.

The trouble lies within the definition of the terms securities, currencies, and commodities. What does each of these terms actually mean in the 21st century?

Proponents of the S.E.C., like Gary Gensler, claim that cryptocurrencies are essentially securities that fall under the jurisdiction of the S.E.C., but others believe that crypto, and Bitcoin, in particular, are commodities that should be regulated by the CFTC.

Two Senators with this pro-commodities view have stepped forward to introduce a bill that would leave the CFTC with complete oversight and regulatory power over cryptocurrencies and digital assets.

Debbie Stabenow (D-MI) and John Boozman (R-AR) are attempting to push through a bipartisan bill that would leave the CFTC as the sole arbiter of crypto regulations.

Personally, I believe that neither side is right because the term ‘cryptocurrency’ is, in and of itself, a nebulous and misleading term.

We are dealing with a diverse landscape of currencies, digital assets, network platforms, whole autonomous business organizations, art, collectibles, savings technologies, and just about everything else under the sun.

How could one agency possibly police all of that diversity and innovation?

Here’s more on the bill proposal:

2/ The heart of the bill is a requirement that "digital commodity platforms" like exchanges & brokers register with the CFTC & follow certain rules aimed at protecting consumers, disclosing risks, & preventing manipulation.

Sounds reasonable! Most people are on board with this.

— Jake Chervinsky (@jchervinsky) August 3, 2022

3/ The bill looks to improve upon similar proposals for CFTC spot jurisdiction in the DCEA (House Ag) & the RFIA (Lummis-Gillibrand).

Secondary market regulation is a top priority in DC, so don't be surprised if one of these bills (or a combined version) becomes law next year.

— Jake Chervinsky (@jchervinsky) August 3, 2022

According to Finbold:

Adding crypto to an agency’s scope would grant it more funding, influence, and job positions for former government officials.

Furthermore, congressmen belonging to commissions supervising such agencies would gain more lobbyists and campaign donations, Kiernan writes.

4/ The devil's in the details & the bill does raise some issues to be addressed, like if its definition of "digital commodity platform" is too broad.

I agree with @valkenburgh & @coincenter on this, but as Peter says, the bill's authors definitely get it:https://t.co/yAo6LaUyop

— Jake Chervinsky (@jchervinsky) August 3, 2022

5/ So let's all thank @SenStabenow, @JohnBoozman, @CoryBooker, & @SenJohnThune (plus their very hardworking staff) for leading the way forward on smart, bipartisan crypto regulation.

This will be an important & influential group as legislation heats up next year & beyond.

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— Jake Chervinsky (@jchervinsky) August 3, 2022

Politico explains:

Stabenow and Boozman’s bill positions the CFTC to take the lead. Exchanges and brokerages — particularly those trading Bitcoin or Ether — would have to register with the CFTC. It also tasks the much-smaller financial derivatives regulator with creating new rules to protect consumers and establish guardrails around practices like margin trading.

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