Under a new bill introduced by Sens. Debbie Stabenow (D-Mich.) and John Boozman (R-Ariz.), the Commodity Futures Trading Commission would take the lead in overseeing the two largest cryptocurrencies and the platforms where they are traded (R-Ark.).
The CFTC and the Securities and Exchange Commission would share oversight of the remaining cryptocurrencies, though the process for making those determinations is not yet clear.
The two agencies have been competing for more authority over digital assets, adding to Washington’s confusion about how to classify and regulate cryptocurrencies and the economy that has sprung up around them. The bill aims to provide some clarity by classifying bitcoin and ethereum as commodities, which account for roughly two-thirds of the cryptocurrency market.
The CFTC, which already regulates futures markets for bitcoin and ethereum, would be in charge of both. Online trading platforms for digital tokens, such as Coinbase, would also be required to register with the agency.
In a statement, Stabenow, the chair of the Senate Agriculture Committee, which oversees the CFTC, said that crypto markets “lack the transparency and accountability” that investors expect from traditional financial markets. “That’s why we’re closing regulatory gaps and requiring these markets to follow simple rules that protect customers and keep our financial system secure.”
In addition to Boozman, the top Republican on the agriculture committee, the bill is co-sponsored by Sens. Cory Booker (D-NJ) and John Thune (R-S.D.).
The bill joins an increasingly crowded field of legislative proposals aimed at regulating the trillion-dollar digital asset marketplace, a priority that has gained urgency following the recent collapses of several high-profile crypto projects, which devastated tens of thousands of retail investors. House Financial Services Committee leaders are working with the Treasury Department on legislation to subject stablecoin issuers to bank-like oversight, though they scrapped plans for a quick markup late last month due to ongoing differences with the draft.
Sens. Cynthia M. Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) unveiled a comprehensive plan to regulate the industry in June. Their proposal gave the CFTC primary responsibility for the industry, but unlike Stabenow and Boozman’s bill, it would make it optional for crypto exchanges to register with the agency.
Both bills would allow the CFTC to levy fees on crypto industry participants in order to fund an expanded budget. The agency, which is roughly one-sixth the size of the SEC, is already in charge of a wide range of financial markets, from grain and oil futures to more complex products.
For months, cryptocurrency advocates have lobbied lawmakers to make the CFTC their primary regulator. They claim the regulator will treat them better than the SEC, whose Chair Gary Gensler has taken an aggressive public stance toward the industry.
The CFTC’s Chairman, Rostin Behnam, is also advocating for a larger role for his agency. In a speech last month at the Brookings Institution, he said that federal and state regulators sharing responsibility in a “patchwork blanket” approach “is increasingly proving inadequate” as the crypto market evolves.
The liberal think tank Center for American Progress’ Todd Phillips, director of financial regulation and corporate governance, called the Stabenow-Boozman proposal “a great bill.”
“It provides a regulatory structure around crypto commodities without limiting the authority of other agencies, such as the SEC,” he explained in an interview. “It specifically requires the registration and regulation of brokers, puts in place investor protection rules and puts up a framework around this market to ensure investors aren’t taken advantage of.”