Industry representatives are proposing improvements to the Stabenow-Boozman crypto regulatory law

by · September 15, 2022

Representatives of the crypto community shared their responses to the proposed Digital Commodities Consumer Protection Act (DCCPA) on September 15. Speaking on the second panel of a hearing held by the Senate Agriculture Committee, invited speakers praised the bill as a whole but had recommendations for improvements.

Definitions were an issue for all five speakers and Blockchain Association CEO Jake Chervinsky, who released a statement on the bill within moments of the conclusion of the hearing. All the commenters expressed a desire for a clearer definition of securities and commodities.

“While the bill includes a carve-out for securities, it does not explicitly define what is or is not a security (through the application of the Howey test or otherwise),” said Coinbase Vice President and Assistant General Counsel Christine Parker.

Crypto Council for Innovation CEO Sheila Warren said:

“The bill leaves it up to the agencies and the courts to decide whether a digital asset, other than Bitcoin and Ether, is a security or not. To date, this approach has not worked well, with significant implications for consumers.”

Center for American Progress Director of Financial Regulation and Corporate Governance Todd Phillips said the bill’s definition of commodities does not take into account the role of miners and strikers.

In addition, Warren said, “The bill limits brokers, dealers and trading facilities to dealing only in ‘transactions’ or ‘digital goods’ that are not ‘readily susceptible to manipulation,’ but it does not attempt to define what is readily susceptible to manipulation.” ‘ means.”

General counsel for Citadel Securities and former chairman of the Commodity Futures Trading Commission (CFTC), Heath Tarbert, found the descriptions of required registrants under the bill to be far too broad. He also favored an explicit ban on regulations by enforcement:

“While the CFTC has not typically engaged in rulemaking by way of enforcement, it is important for Congress to make its intent on this point crystal clear.”

Chervinsky was concerned that the definition of “digital commodity platform” was too broad and could place “onerous demands on some firms that are not justified by the minimal risk they pose.” He also saw threats to privacy in the demands of these platforms.

Speakers also had a number of concerns about the scope of the bill. The bill needs specifics to limit the authority of the CFTC to avoid regulating transactions that do not take place in the United States, according to Warren and Chervinsky.

The bill “could also be interpreted as a ban on decentralized finance (DeFi),” Chervinsky said. Warren echoed that point, saying the bill had provisions that are “unworkable” for DeFi. Stellar Development Foundation Executive Director and CEO Denelle Dixon pointed out that “some could interpret the text to cover aspects of the technology rather than the participants offering products and services that leverage the technology.”

The DCCPA was introduced by Agriculture Committee Chair Debbie Stabenow and Ranking Member John Boozman on August 3. This was the first hearing on the bill, which is unlikely to pass during this Congress.