A Senate proposal to bring the cryptocurrency industry under federal oversight would be a great victory for the sector, as it would give the Commodity Futures Trading Commission (CFTC) regulatory power over the Securities and Exchange Commission (SEC).
Senators Cynthia M. Lummis and Kirsten Gillibrand, the bill sponsors, say the bill is the first serious effort to implement comprehensive regulation of the crypto market, which has created a new class of billionaires and revolutionized financial services, but which has also produced scams and investor losses that raise regulators‘ concerns.
SEC’s chair, Gary Gensler demurred by expressing how digital assets qualify as securities just like stocks in publicly traded companies. As such, Gensler argues that digital assets should be regulated by the SEC.
The bill from Lummis and Gillibrand, however, rejects that claim, asserting instead that “most digital assets are much more similar to commodities than securities,” a joint news release from the senators’ offices said as reported by the Washington Post.
“The United States is the global financial leader, and to ensure the next generation of Americans enjoys greater opportunity, it is critical to integrate digital assets into existing law and to harness the efficiency and transparency of this asset class while addressing risk,” Lummis said
Bitcoin and Ethereum, two of the most popular cryptocurrencies, are regulated by the CFTC already. However, the new proposal would give the agency broader authority by giving it oversight of the spot market for crypto coins, which would include a wide variety of digital coins. CFTC would be required to register crypto trading platforms such as Coinbase under the bill.
The Post reports the CFTC is far smaller than the SEC, with about a sixth of its budget. The bill, dubbed the Responsible Financial Innovation Act, would address that resource gap by allowing the CFTC to assess a fee on the companies it oversees. Advocates of tougher crypto regulation nevertheless argue that investors stand to suffer if the SEC is forced to take a back seat.
A range of other provisions are included in the measure, including changes to the tax treatment of crypto and a study of its environmental impact. Using digital assets to make purchases under $200 would be exempt from capital gains taxes under this bill.