A bipartisan group of senators is looking to give the Commodities Futures Trading Commission regulatory authority over cryptocurrencies.
Sens. Debbie Stabenow (D-MI) and John Boozman (R-AR) on Wednesday introduced the Digital Commodities Consumer Protection Act, which would create a mandatory framework for cryptocurrencies like bitcoin that the lawmakers involved hope will safeguard customers and digital markets.
“One in 5 Americans have used or traded digital assets — but these markets lack the transparency and accountability that they expect from our financial system. Too often, this puts Americans’ hard-earned money at risk,” said Stabenow.
The bill would specifically close regulatory gaps by requiring all digital commodity platforms (brokers, dealers trading facilities, etc.) to register with the CFTC.
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The legislation also mandates that those platforms ban “abusive” trading practices, disclose or eliminate conflicts of interest, maintain robust cybersecurity programs, report suspicious transactions, and maintain sufficient financial resources.
“This legislation would provide the CFTC with the necessary visibility into the marketplace to respond to emerging risks and protect consumers, while also providing regulatory certainty to digital commodity platforms,” said Sen. John Thune (R-SD).
The legislation also seeks to define what a “digital commodity” is.
The definition would include the flagship cryptocurrency bitcoin, as well as ethereum, although it “excludes certain financial instruments including securities,” according to a breakdown of the bill. It also amends the definition of “commodity” in the Commodity Exchange Act to include digital assets.
CFTC Chairman Rostin Behnam commended the proposal.
“As American investors continue to demonstrate growing interest in digital assets, there is a greater need to bring these markets within the regulatory fold,” Behnam said. “We are at a critical inflection point where new legislative authority is needed to clarify ambiguities and provide a regulatory framework to the digital commodity market that protects customers, provides market integrity and certainty, and ensures financial stability.”
Many in Congress and in the finance world have pushed for greater oversight and regulation over cryptocurrencies, which have exploded in popularity over the past few years as they gained greater institutional acceptance.
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The news comes as investors have fled digital assets in favor of less risky assets.
Bitcoin has had a terrible year. The cryptocurrency hit an all-time high of $69,000 last November, but it has since fallen steadily, crashing to $40,000 by May and then further declining to the $23,000 level it is at now — its lowest level since the end of 2020.
