Two senators today introduced bipartisan legislation that aims to rein in the “Wild West” of cryptocurrency trading, putting the Commodity Futures Trading Commission as the key regulator.
The bill’s sponsors are Democratic Senator Kirsten Gillibrand and Republican Senator Cynthia Lummis, who sit on the Senate Agriculture Committee and Banking Committee, respectively. The “Responsible Financial Innovation Act” they say will create a regulatory framework for digital assets, something that has been needed for a long time in a market that has created new billionaires but also been plagued by scams. It’s thought 16% of adult Americans now have investments in cryptocurrencies, even though the market is far from being stable.
The bill wants to treat cryptocurrencies as commodities like oil or coffee, under the regulation of the CFTC, which many of those in the cryptocurrency sector see as much more favorable than having the Securities and Exchange Commission as the regulator.
“The Responsible Financial Innovation Act, a bipartisan framework that I crafted in conjunction with Senator Kirsten Gillibrand, creates regulatory clarity for agencies charged with supervising digital asset markets, provides a strong, tailored regulatory framework for stablecoins, and integrates digital assets into our existing tax and banking laws. I am grateful for Senator Gillibrand’s partnership on this legislation, and I look forward to bringing more of our colleagues into this effort,” said Lummis in a press release.
The SEC, which enforces the U.S.’s securities laws and protects investors from wrongdoing – as opposed to the much smaller body of the CFTC’s regulation of commodities – will only get involved with oversight if told to do by the courts. For some time now, regulation over digital assets has been described as a “turf war”.
The bill has been met positively by cryptocurrency investors who say the SEC shouldn’t have oversight of decentralized digital tokens as it just doesn’t make any sense, although it’s the SEC that has been more outspoken as to reining-in the market. Last year, SEC Chairman Gary Gensler called the market the “Wild West” before securities laws were brought in. He says digital assets are not commodities, but similar to stock, and should be treated as such.
Critics of the bill say leaving oversight to the CFTC is tantamount to leaving the market unregulated, although Gillibrand doesn’t think so, saying the bill will “provide clarity to both industry and regulators, while also maintaining the flexibility to account for the ongoing evolution of the digital assets market.”