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 rocked by falling prices and lender shutdowns.
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 run counter to bills proposed by other members of Congress and consumer advocates, who have proposed giving the Securities and Exchange Commission authority.
This year, crypto investors have seen prices crash and companies collapse with fortunes and jobs disappearing overnight, and federal regulators have accused some companies of running an illegal securities exchange. Bitcoin, the largest digital asset, is trading at a fraction of its all-time high, from more than $68,000 in November 2021 to around $23,000 on Wednesday. Industry leaders have been calling this period crypto winter, and lawmakers have been desperate to enforce strict oversight.
The bill by Stabenow, D-Michigan, and Boozman, D-Arkansas, would require all cryptocurrency platforms, including traders, dealers, brokers and sites that hold crypto for customers, to register with the CFTC.
The CFTC is historically underfunded and a much smaller regulator than the SEC, which has armies of investigators investigating possible wrongdoing. The bill attempts to alleviate those problems by imposing user fees on the crypto industry, which in turn would fund stronger oversight of the industry by the CFTC.
“Our bill will give the CFTC exclusive jurisdiction over the digital commodity spot market, leading to more consumer protections, 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’s critical that (the CFTC) has the proper tools to regulate this growing market,” Thune said.
The bill can be added to the list of proposals that have come out of Congress this year.
In April, Sen. Pat Toomey, R-Pa., introduced legislation called the Stablecoin TRUST Act, which would create a framework to regulate stablecoins, which have experienced massive losses this year. Stablecoins are a type of cryptocurrency pegged to a specific value, usually the US dollar, another currency or gold.
Additionally, in June, Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., proposed sweeping legislation called the Responsible Financial Innovation Act. That bill proposed legal definitions of digital assets and virtual currencies; would require the IRS to adopt guidelines on accepting digital assets and charitable contributions from retailers; and would make a distinction between a digital asset that is a commodity and one that is a security, which was not done.
Along with the Toomey and Lummis-Gillibrand legislation, the proposal is being worked out in the House Financial Services Committee, although those negotiations have stalled.
Committee Chairwoman Maxine Waters, D-Calif., said last month that she, Republican Rep. Patrick McHenry of North Carolina and Treasury Secretary Janet Yellen had made significant progress toward a deal on the bill, “unfortunately we’re not there yet, and so we will continue our negotiations during the August break.
President Joe Biden’s Task Force on Financial Markets issued a report last November urging Congress to pass legislation to regulate stablecoins, and Biden issued an executive order earlier this year calling on various agencies to consider ways to regulate digital assets.
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