Four U.S. senators, members of the agriculture committee, have introduced a bill classifying bitcoin and other cryptocurrencies as a commodity. This guidance will give the Commodity Futures Trading Commission (CFTC) greater powers to oversee the sector.
The second bill would make the CFTC the dominant watchdog of the crypto sector.
The US Senate has just been proposed a second bill to regulate cryptocurrencies, expanding the category of goods for the occasion. In the future, “digital goods” may become a regulatory standard applicable to many cryptocurrencies. But this new legislative effort, laudable as it may be, still does not answer the main question, which is a clear distinction between cryptocurrencies that fall under the category of goods (commodities) and cryptocurrencies that fall under the category of securities (financial securities). Today, only Bitcoin seems to have a consensus.
Despite this important stumbling block, this new bill, if it becomes law, would give the CFTC the power to oversee the cryptocurrency spot markets. He, who until now has only regulated his derivatives such as BTC futures, could therefore also regulate the underlying asset.
A jurisdiction that will nonetheless rely on the Securities and Exchange Commission (SEC) to determine if a particular cryptocurrency is in the realm of commodities. To do this, the regulator has an arsenal of tools, including the famous “Howey test”, which has been determining what is and is not a financial security since the 1930s. But for now, to the chagrin of sector players, he continues to maintain a very unartistic vagueness around the issue.
CFTC Holds Rope in Upcoming Cryptocurrency Regulation
The declared intent is to unify the regulation it seeks to unify, Senator Debbie Stablenow, chair of the committee that introduced the bill, said.
Right now, there is a patchwork of government regulations and no federal agencies to oversee cryptocurrencies, and we know that needs to change. We are closing legal loopholes and requiring these markets to operate with simple rules that protect customers and keep our financial system safe.
In fact, if accepted, crypto market participants would have to register with a federal agency. The claim is welcomed by the FTX CEO. He assured that his company would be happy to comply with the proposed new regime.
I am very excited to see (…) the introduction of a strong bill for customer protection and federal oversight of cryptocurrencies. (…) This will ensure clear federal oversight of digital asset commodity markets. (…) We would find it constructive and beneficial to register under such a regime, which finally provides comprehensive customer protection and oversight of the crypto commodity markets in the United States. This would help increase liquidity as well as eliminate unscrupulous players in the ecosystem.
Sam Bankman-Fried on Twitter
CFTC Chairman Rostyn Behnam, who has been fighting for some time to have his agency take the lead in implementing future cryptocurrency regulations, welcomed this new initiative. After Senators Cynthia Lamnis and Kirsten Gillibrand introduced the financial innovation bill in June, which already gave the CFTC the power to control the sector, the federal agency may well have ended up stealing the lead role in the SEC from Gary Gensler.