The Commodity Futures Trading Commission would take the lead role in overseeing the two largest cryptocurrencies and the platforms where they are traded under a new bill from Sens. Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.).
The Senate proposal would give the CFTC responsibility for bitcoin and ethereum
The two agencies have battled for more authority over digital assets, contributing to confusion in Washington over how to classify and regulate cryptocurrencies and the economy that has sprung up around them. The bill aims to provide some clarity by considering both bitcoin and ethereum as commodities, which together make up about two-thirds of the cryptocurrency market.
That would expose bitcoin and ethereum to regulation by the CFTC, which already oversees futures markets for both. And online platforms that allow investors to trade the digital tokens, such as Coinbase, will be required to register with the agency.
Stabenow — chairman of the Senate Agriculture Committee, which oversees the CFTC — said in a statement that crypto markets “lack the transparency and accountability” investors expect from traditional financial markets. “That’s why we’re closing regulatory loopholes and requiring these markets to operate under simple rules that protect customers and keep our financial system safe.”
In addition to Boozman, the top Republican on the Agriculture Committee, two other members of the panel, Sens. Cory Booker (DN.J.) and John Thune (RS.D.), co-sponsors of the measure.
The bill joins an increasingly crowded field of bills to regulate the marketplace for trillions of digital assets, a priority that has become more urgent after the recent implosions of several high-profile crypto projects have ruined tens of thousands of retail investors. Leaders of the House Financial Services Committee are working with the Treasury Department on a bill to subject issuers of stablecoins to bank-like oversight, though they shelved plans for a quick markup late last month due to ongoing differences with the draft.
And Sens. Cynthia M. Lummis (R-Wyo.) and Kirsten Gillibrand (DN.Y.) in June unveiled what they billed as a comprehensive plan to regulate the industry. Their proposal left primary responsibility for the industry with the CFTC, but unlike the bill from Stabenow and Boozman, it would make it optional for crypto exchanges to register with the agency.
Both bills would allow the CFTC to assess fees on crypto industry players to fund an expanded budget. The agency, about one-sixth the size of the SEC, is already tasked with overseeing a range of financial markets, from grain and oil futures to more complex products.
Crypto interests for months have been lobbying lawmakers to strengthen the CFTC as their top regulator. They say the regulator will give them friendlier treatment than the SEC, where Chairman Gary Gensler has taken an aggressive public line against the industry.
CFTC Chairman Rostin Behnam is also advocating for a greater role for his agency. In a speech at the Brookings Institution last month, he said that federal and state regulators who share responsibility in a “patchwork” approach are “proving increasingly inadequate” as the crypto market evolves rapidly.
An SEC spokesperson declined to comment on the bill; The CFTC did not respond to a request for comment.
Todd Phillips, director of financial regulation and corporate governance at the liberal think tank Center for American Progress, called the Stabenow-Boozman proposal “a big bill.”
“It provides a regulatory structure around cryptocurrencies without taking away from other agencies, like the SEC,” he said in an interview. “It specifically requires the registration and regulation of brokers, puts in place investor protection rules and sets up a framework around this market to ensure that investors are not exploited.”
