After 13 years, at least three incidents, dozens of scams and Ponzi schemes and hundreds of billions of dollars made and evaporated, cryptocurrencies are finally getting the attention of Congress, whose lawmakers and their lobbyists have provided Capitol Hill with proposals for how to regulate the industry.
The latest bipartisan proposal came on Wednesday from the Senate. Debbie Stabeno, D-Michigan, and John Bozeman, R-Ark. Regulatory authority over Bitcoin and Ether will be handed over to the Commodity Futures Trading Commission. Stabenow and Boozman lead the Senate Agriculture Committee, which has authority over the CTFC.
Bills proposed by other members of Congress and consumer advocates have suggested giving power to the Securities and Exchange Commission.
This year, cryptocurrency investors have seen prices plummet, businesses collapse with wealth and jobs disappearing overnight, and some companies have been accused by federal regulators of running an illegal stock exchange. Bitcoin, the largest digital asset, is trading at a fraction of its all-time high, dropping from over $68,000 in November 2021 to around $23,000 on Wednesday.
While cryptocurrencies have had crashes before, most recently in 2018, this crash has been broader and more systematic. A major hedge fund filed for bankruptcy earlier this summer, which in turn led to the collapse of other crypto brokers as well. Some cryptocurrency brokers mistakenly claim that their clients’ deposits are backed by deposit insurance, such as banks.
Lawmakers, impatient with the crypto industry’s attempts to live in an unbanked and unregulated world, are now desperate to implement strict oversight. The industry spent $9 million in 2021 on lobbying fees, according to a report by Public Citizen, a number that is sure to be higher with all of this year’s Congressional proposals.
The Stabenow-Boozman bill would be a win for the crypto industry, which sees the CFTC as a more favorable regulator for the industry than the SEC. The Commodity Futures Trading Commission, which last year had a budget of $304 million with roughly 666 employees, is a fraction of the size of the Securities and Exchange Commission, which has a budget of nearly $2 billion and 4,500 full-time employees.
“(The cryptocurrency industry) is trying to get anyone other than the Securities and Exchange Commission to regulate it,” said Cory Klepsten, CEO of Swan Bitcoin. While he advocates for Bitcoin, Klippsten is highly suspicious of much of the broader crypto industry, which has produced countless other coins and coins that he considers nothing more than scams.
Crypto tycoon Sam Bankman-Fried, who has donated millions of dollars to Democratic-leaning candidates and PACs, tweeted his support for the Stabenow-Boozman bill.
Bozeman said, in a call with reporters, that the industry’s preferred option for regulating cryptocurrency is the CFTC.
“They are somewhat united on this,” he said.
At a press conference, Stabenow and Boozman acknowledged that while they believe the CFTC is up to the task of regulating cryptocurrency, the agency will need support. The CFTC already oversees futures contracts for Bitcoin and Ethereum, and the bill attempts to mitigate employment-related issues by charging user fees to the crypto industry. This money, in turn, will fund more robust oversight of the industry by the CFTC. The bill would leave out crypto-like products, such as tokens or non-fungible tokens (NFTs), until the Securities and Exchange Commission can assert its regulatory authority.
“It is clear that if the Counter-Terrorism Committee is going to move aggressively in this area, it will need more resources,” Stabeno said.
There has been a growing list of proposals from Congress this year that try in various ways to tackle problems in the cryptocurrency industry. Senator. Pat Tome of Pennsylvania introduced legislation in April called the Stablecoin TRUST Act, which would create a framework for regulating stablecoins, which have seen massive losses this year. A stablecoin is a type of cryptocurrency that is pegged to a specific value, usually the US dollar, another currency, or gold.
In June, Sens. Kirsten Gillibrand, DNY, and Cynthia Lummis, R-Wyo. They proposed a wide-ranging bill called the Responsible Financial Innovation Act. The bill proposed legal definitions of digital assets and virtual currencies; It will require the IRS to adopt guidelines on merchant acceptance of digital assets and charitable contributions; It will distinguish between digital assets that are commodities and those that are securities, which has not been done.
the meaning. Cory Booker, DNJ, and John Thune, RS.D, are also sponsors of the Stabenow-Boozman bill. Along with the Toomey legislation and the Lummis-Gillibrand legislation, a proposal is being put in place in the House Financial Services Committee, though those negotiations have faltered.
Committee Chair Maxine Waters, a Democrat from California, said last month that while she, Senior Republican Patrick McHenry of North Carolina and Treasury Secretary Janet Yellen made significant progress toward an agreement on the legislation, “unfortunately we’re not there yet, so we’ll continue our negotiations during August holiday.
President Joe Biden’s Working Group on Financial Markets last November released a report calling on Congress to pass legislation that would regulate stablecoins, and earlier this year Biden issued an executive order calling on a variety of agencies to consider ways to regulate digital assets.
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