New crypto oversight legislation comes as industry shakes up
WASHINGTON (AP) – A bipartisan group of senators on Wednesday proposed a bill to regulate cryptocurrencies, the latest attempt by Congress to formulate ideas on how to oversee a multibillion-dollar industry that has been plagued by collapsing prices and lenders that stops operation.
The regulations offered by Senate Agriculture Committee Chairwoman Debbie Stabenow and top Republican member John Boozman would authorize the Commodities Futures Trading Commission to be the default regulator for cryptocurrencies. That would be contrary to bills proposed by other members of Congress and consumer advocates, who have proposed giving the power to the Securities and Exchange Commission.
This year, crypto investors have seen prices plummet and companies crater with fortunes and jobs disappear overnight, and some firms have been accused by federal regulators of running an illegal securities exchange. Bitcoin, the largest digital asset, is trading at a fraction of its all-time high, down from more than $68,000 in November 2021 to around $23,000 on Wednesday. Industry leaders have referred to this period as a “crypto winter,” and lawmakers have been desperate to implement strict oversight.
The bill by Stabenow, a Democrat from Michigan, and Boozman, from Arkansas, would require all cryptocurrency platforms — including traders, dealers, brokers and websites that hold crypto for customers — to register with the CFTC.
The CFTC is historically an underfunded and much smaller regulator than the SEC, which has armies of investigators to look into potential wrongdoing. The bill attempts to alleviate these problems by imposing user fees on the crypto industry, which in turn would fund more robust oversight of the industry by the CFTC.
“Our bill would give the CFTC exclusive jurisdiction over the digital commodity spot market, which would lead to more safeguards for consumers, market integrity and innovation in the digital commodity space,” Boozman said in a statement.
Sens. Cory Booker, DN.J., and John Thune, RS.D., are co-sponsors of the bill.
“It is critical that (the CFTC) have the right tools to regulate this growing market,” Thune said.
The legislation could be added to the list of proposals that have come out of Congress this year.
Sen. Pat Toomey, R-Pa., in April introduced legislation, called the Stablecoin TRUST Act, that would create a framework to regulate stablecoins, which have suffered huge losses this year. Stablecoins are a type of cryptocurrency tied to a specific value, usually the US dollar, another currency or gold.
In addition, Sens. Kirsten Gillibrand, DN.Y., and Cynthia Lummis, R-Wyo., in June introduced a sweeping bill, called the Responsible Financial Innovation Act. That bill proposed legal definitions of digital assets and virtual currencies; will require the IRS to adopt guidance on seller acceptance of digital assets and charitable contributions; and will distinguish between digital assets that are raw materials and those that are securities, which has not been done.
Along with the Toomey legislation and the Lummis-Gillibrand legislation, a proposal is being drafted in the House Financial Services Committee, although those negotiations have stalled.
Committee Chairwoman Maxine Waters, D-Calif., said last month that while she, top Republican Rep. Patrick McHenry of North Carolina and Treasury Secretary Janet Yellen had made significant progress toward an agreement on the legislation, “unfortunately, we are not there yet, and will therefore continue our negotiations during the August holidays.”
President Joe Biden’s Financial Markets Task Force released a report last November urging Congress to pass legislation that would regulate stablecoins, and Biden issued an executive order earlier this year urging a number of agencies to look at ways to regulate digital assets .
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