Senate bill to strengthen CFTC's crypto authority
The senate bill proposed on Wednesday by Michigan Democrat Sen. Debbie Stabenow and Arkansas Republican Sen. John Boozman is the latest attempt in Washington to establish more defined government laws for digital assets. Under this law, the Commodity Futures Trading Commission would be given power over the markets for Bitcoin and Ether, the two major cryptocurrencies.
The CFTC and the SEC have been wrangling for control of cryptocurrencies. Tensions recently heightened when the SEC classified a list of crypto tokens as securities in an insider trading lawsuit, triggering public criticism from Caroline Pham, a CFTC commissioner.
Senate bill could give clarification
The senate bill proposed could give some clarification. It would give the CFTC direct authority over tokens classified as "digital commodities." According to the bill summary, this covers bitcoin and ether.
Online exchanges and other businesses that assist in token trading would have to register with the CFTC. The bill would also mandate the CFTC to verify crypto businesses, avoid abusive trading practices, have adequate financial resources and appropriate cybersecurity safeguards.
The bill also acknowledges the role of other financial bodies in regulating digital assets that are not commodities but act more like securities or means of payment.
The emphasis on Ether and Bitcoin as commodities is consistent with the views of SEC Chair Gary Gensler, who has stated that most other tokens are likely to be securities.
However, the bill only briefly mentions the classification and uses the examples of Bitcoin (BTC) and Ether (ETH), which the SEC previously classified as commodities. In addition, the law states that any crypto assets that are not deemed as securities by the SEC may bear the CFTC's commodities stamp.
Rostin Behnman, the head of the CFTC, has been vying for a new authority to oversee digital commodities spot markets, where the assets are traded directly. The new legislation would give that power. The bill states that the CFTC would have "exclusive authority over any account, agreement, contract, or transaction involving a digital commodities trade."
A broader crypto regulation bill submitted in June by Senators Kirsten Gillibrand and Cynthia Lummis considers the CFTC to play a leading role in crypto regulation. Gillibrand and Lummis recently admitted that the complete legislative package was unlikely to pass this year but that some provisions, such as those defining the function of the CFTC, may go through Senate committees.
Author: Priya Kumari
Priya is a passionate content writer and the co-founder of Finendorse. She is an enthusiastic crypto investor and has a huge interest in the upcoming digitisation age.