The US Securities and Exchange Commission (SEC), which has significant oversight of the cryptocurrency industry, would undergo changes after US senators disclosed a bipartisan draft bill for the crypto industry. Now, the Commodity Futures Trading Commission (CFTC) will have primary regulatory oversight of spot crypto markets, marking a regulatory shift from the SEC to CFTC.
US Senators propose bipartisan crypto bill
The Senate Agriculture Committee — Senators John Boozman and Cory Booker — released the crypto draft bill yesterday, classifying cryptocurrencies as digital commodities rather than securities. The new draft would require CFTC registration for
- crypto spot exchanges
- brokers
- dealers
The crypto draft bill also requires all these entities to be more transparent in their activities, keep accurate records of transactions, and practice measures to prevent fraud and manipulation.
Shifting from SEC to CTC could bring regulatory clarity
Under the SEC, most of the cryptocurrencies are considered securities. However, many still struggle with characteristics of both commodities and securities, and there would be an end to this identity crisis once the bill comes into legislation.
The bill would also be an optimistic matter for blockchain developers. Why? Earlier, there were legal grey areas related to what developers performed; even the codes they wrote were considered as included in financial transactions.
However, the draft bill supports developers who run nodes, write code, and execute smart contracts by not treating them as financial transmitters or brokers. In other words, regulators cannot categorize crypto developers as money transmitters because they are building or operating blockchain infrastructure and are not dealing with people’s money.
Several crypto enthusiasts are highly vocal about this new shift in regulatory oversight. Some supporters claim that this bill gives institutions confidence to enter the market. “If this passes, it’s basically a green light for devs and institutions. SEC is about to lose a lot of control”, wrote a crypto trader.
In the past, crypto exchanges or cryptocurrencies did not have a clear idea to which regulator they were accountable. This has discouraged many fintech institutions from entering the market with full compliance. The new crypto draft bill intends to provide clear regulations for digital asset commodities, including several cryptocurrencies.
Although the new bill is a plus point for crypto, if enabled, it can question the resources of the CFTC. The commission has a smaller number of resources to handle, for instance, staff and budget, when compared to the SEC. Even in terms of experience, CFTC has less exposure to the crypto market. However, according to reports, the commission is planning to expand its resources to properly watch the crypto industry.
