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Senate Ag Committee Wants CFTC to Be Prime Crypto Regulator

4 August 2022

There’s really no way this goes well — the Senate Agricultural Committee wants the Commodity Futures Trading Commission to have “exclusive jurisdiction over cryptocurrency trades that meet commodities law” and lawmakers have drafted a bill to do just that.

“The Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission, introduced a bipartisan bill Wednesday that would grant the CFTC “exclusive jurisdiction” over cryptocurrency trades that meet commodities law.

“The Digital Commodities Consumer Protection Act of 2022, sponsored by Senators Debbie Stabenow (D-Mich.), John Boozman (R-Ark.), Cory Booker (D-N.J.) and John Thune (R-S.D.), would create a definition of “digital commodity” that would include cryptocurrencies like bitcoin and ether but not anything that may be a security, giving the CFTC the ability to oversee both digital commodity transactions and force registration of digital commodity platforms, according to a section-by-section breakdown of the bill.”

If someone lab-engineered a mechanism to wholly undermine the crypto industry and possibly smother it in the cradle, it would look a lot like what they are proposing.

Even those pro-regulation voices in the crypto industry who simply want more clarity aren’t getting what they want from this proposal.

“The crypto industry has been pushing for either a federal agency or Congress to create a clear definition of “digital commodity” or a digital security, which could give companies greater clarity on when and how they must register with the CFTC or the Securities and Exchange Commission. The bill doesn’t provide that definition. The CFTC would have some ability to define digital commodities, and the bill appears to still defer to the SEC on what a security is.”

Right now state regulations are the primary government vehicle in dealing with crypto exchanges, and most people in the industry say existing federal guidelines regarding the listing of digital securities are far from clear.

The SEC is ramping up its crypto enforcement, but several lawmakers and industry advocates say it has been arbitrary and heavy-handed, while providing no clear guidance for honest actors.

While the industry may need clarity and consistency as regards securities and commodities, this will provide neither.