Monday, May 23, 2022

Crypto industry would get overseen by the CFTC, its preferred regulator, under new bill

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As Washington policymakers wrangle over how to oversee cryptocurrency, a new bipartisan proposal would give the rapidly-expanding sector a victory by handing authority to the Commodity Futures Trading Commission, seen by the industry as a more benevolent regulator.

The bill — introduced Thursday by Republican Reps. Glenn Thompson (Pa.) and Tom Emmer (Minn.) and Democratic Reps. Ro Khanna (Calif.) and Darren Soto (Fla.) — would allow crypto trading platforms to register with the CFTC.

Crypto interests have been pressing for months to empower the relatively small agency tasked with regulating financial derivatives to oversee digital assets. They view it as a friendlier option than the Securities and Exchange Commission, where Chairman Gary Gensler has described the crypto industry as rife with scams and pursued aggressive enforcement cases.

Gensler recently said crypto platforms operate similarly to traditional stock exchanges, so “investors should be protected in the same way,” under the SEC’s supervision. CFTC Chairman Rostin Behnam, meanwhile, has said his agency is ready to expand its oversight into much of the roughly $2 trillion digital asset market.

Industry groups applauded the bill, called the Digital Commodity Exchange Act. “There is a growing consensus in Washington that federal oversight of digital asset spot markets is needed, and we believe that the [bill] sets forward an intelligent framework to ensure these markets are safe and secure,” the Blockchain Association said in a statement.

Former senator Cory Gardner (R-Colo.), now chief strategist of political affairs at the Crypto Council for Innovation, said legislation that “promotes sound crypto policy and creates a new atmosphere of opportunity without stifling innovation is a step forward.”

But Todd Phillips, director of financial regulation and corporate governance at the liberal think tank Center for American Progress, said while he had not yet read the bill, he is skeptical that shifting oversight wouldn’t result less stringent enforcement.

“I will say, legislation to give authority over most of the crypto market to the CFTC would likely be deregulatory and would make the applicable law weaker than it currently is,” he said. “Even if existing law isn’t being enforced.”

This is a developing story and will be updated.

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