Senate bill would give bitcoin, ether oversight to commodity regulator

Souvenir tokens representing the cryptocurrency Bitcoin and the Ethereum network, with its original token ether, plunge into water in this illustration taken May 17, 2022. REUTERS/Dado Ruvic/Illustration

WASHINGTON, Aug 3 (Reuters) – A new bill introduced in the U.S. Senate would make the Commodity Futures Trading Commission (CFTC) the direct regulator of the biggest cryptocurrencies.

The measure, introduced by the top Democrat and Republican on the Senate Agriculture Committee, would give the derivatives regulator exclusive jurisdiction over bitcoin and ether, the two most popular cryptocurrencies, as well as all other crypto products determined to be commodities.

It would also require such companies offering crypto platforms to register with the CFTC, including brokers, custodians and exchanges. That registration would come with requirements to maintain fair pricing, prevent market manipulation, avoid conflicts of interest and maintain “adequate financial resources,” according to a description of the bill provided by senators.

Sponsors of the measure, including Senate Agriculture Committee Chairwoman Debbie Stabenow and Sen. John Boozman, the panel’s top Republican, argued that it would bring much-needed regulatory clarity to the crypto market by placing much of its policing under a single regulator.

“This fast-growing industry is currently governed largely by a patchwork of state-level regulations. It is simply not an effective way to protect consumers from fraud,” Boozman said in a statement.

The bill joins a growing list of legislation aimed at clarifying the rules surrounding cryptocurrency, with lawmakers in both the House and Senate working on measures to place guardrails around the market, which has seen significant turmoil and high-profile failures in recent months .

Stabenow told reporters that the bill is not intended to cover the entire cryptocurrency market, or undermine the ability of the Securities and Exchange Commission to control crypto products that function more like securities.

“We don’t define what a security is. I have great confidence that Chairman Gensler can use his authority,” she said.

As the window closes for legislative action ahead of November’s midterm elections, both Stabenow and Boozman insisted they wanted to move forward with the legislation as quickly as possible, without laying out a precise timeline.

Reporting by Pete Schroeder Editing by Chizu Nomiyama

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