A new bipartisan crypto bill released on Wednesday has a chance of becoming law one day. Don’t expect this to save you
(ticker: COIN) and other crypto trading platforms following a government crackdown.
Bill, directed by the senses. Debbie Stabenow (D., Mich.) and John Boozman (R., Ark.), Give the Commodity Futures Trading Commission new powers and money to control trade in “digital goods,” which the proposed law says includes Bitcoin and Ether. Stabenow and Boozman are senior members of the Senate Agriculture Committee, which oversees the CFTC, giving this bill a greater chance than previous efforts of eventually becoming law.
The bill would require platforms such as Coinbase and FTX to register with the CFTC and take steps to protect consumers and prevent market manipulation. The CFTC would be able to set rules on the use of leverage to trade bitcoin and other commodities, and platforms would pay fees to the CFTC to help fund the increased liabilities of the agency.
Unanswered is the very question that has caused Coinbase and most of the crypto industry so much angst over the past few years: which tokens are securities and which are commodities?
“We’re just saying that when something is defined and meets a test as a commodity, people who regulate commodities should regulate digital commodities,” Stabenow said at a press conference. “We don’t define what a security is.”
Stabenow said their bill, also sponsored by the senses. John Thune (R., SD) and Cory Booker (D., NJ), identified Bitcoin and Ether specifically because the SEC had publicly stated in the past that these tokens are not securities, adding that they trusted the chairman of the SEC, Gary Gensler.
The omission is important to move the bill forward, as any bill that touches on securities laws would likely require input and approval from the Senate Banking Committee.
But it also means that crypto exchanges won’t avoid a potential crackdown from the SEC for allegedly allowing securities to be traded without registration. Last month, the SEC filed an insider trading case that found seven tokens traded on Coinbase are securities, a company claim disputes. The company is would have the subject of an SEC investigation.
“For me, what is important is that it does not take away any authority from other regulators. It just gives new authority to the CFTC,” says Todd Phillips, director of financial regulation and corporate governance at the Center for American Progress, a center-left think tank.
In a tweet, Coinbase Chief Policy Officer Faryar Shirzad said the bill “protects consumers and affirms that key Congressional D&Rs understand the importance of digital asset markets and the need for regulatory clarity.”
Rather than clashing in a series of enforcement actions, the SEC and major crypto projects could eventually come to the negotiating table “agreeing on exchange or broker registrations with numerous exemptions and restrictions.” multi-year timelines for eventual compliance,” says Matthew Wholey, digital asset policy analyst for Washington, DC-based PolicyPartner.
It’s unclear whether the Senate farm bill can become law this year. At the press conference, Stabenow and Boozman said they hoped to have a hearing on the bill as early as September. However, with Congress looking ahead to November’s midterm elections, the bill is more likely to move forward next year, political analysts say.
“Legislators are still grappling with some fundamental issues and there is simply not enough consensus to expect a successful legislative effort in the near term,” said BTIG’s Director of Policy Research, Isaac Boltansky. “This bill is unlikely to become law this year, but the key structural elements of this bill will inform debate in the next Congress and should form the basis of a future package.”
Email Joe Light at [email protected]