It’s August in Washington. That normally means that the temperatures are hot, Congress and tour buses have left town, the pace of activity slows, and I can finally find parking in front of my home on Capitol Hill. It’s glorious!
This August, however, has started out with a bang. Chair Debbie Stabenow (D-MI) of the Senate Agriculture Committee and Ranking Member John Boozman (R-AR) introduced the Digital Commodities Consumer Protection Act of 2022 last week. This much-anticipated legislation would give the Commodity Futures Trading Commission (CFTC) new tools and authorities to regulate the cash digital asset commodity market while leaving the regulation of digital assets that are deemed securities to the US Securities and Exchange Commission (SEC).
This feels like a starting gun moment in the debate on cryptocurrency regulation in the United States. As a former Hill staffer, I can tell you that this announcement was notable. First, this proposal, as well as several other digital asset bills, are bipartisan efforts and as a result may avoid getting caught up in the typical political fights. With the possibility of divided government after the November elections, Congress and the Administration may be forced to turn to bipartisan legislation to get things done. Crypto seems to fit the bill—no pun intended.
Secondly, despite what School House Rock may have taught you, most legislation is tightly controlled and advanced by the leadership of the relevant committees. The fact that this bill was introduced by the chair and ranking member of the Senate Agriculture Committee, which oversees the CFTC and the futures markets, indicates that this committee is putting down a marker. In the House of Representatives, GT Thompson, ranking member of the House Agriculture Committee, has introduced similar legislation. With Republicans potentially taking control of the House in the fall, we could see the leadership of both committees in a position to move on crypto legislation in 2023.
Of course, the next shoe to fall in the legislative debate will be from the banking committees influenced by the views of the SEC. That agency’s chair, Gary Gensler, has not been shy in suggesting that he views most cryptocurrencies as securities. So far, the banking committees have rightly focused their attention on stablecoins and their impact on the banking system. However, we have not seen legislation to date from these committees on which market regulator should take the lead on cash crypto regulation. Nature, and Congressional committees, abhor a vacuum, and I have no doubt that the banking committees will offer their own legislative proposals under their jurisdiction in the coming months.
FIA stands ready to provide expert guidance on all of these efforts. We are an organization that lives, breathes, and obsesses over well-functioning markets and their regulation. Our mission charges us to promote high standards of professional conduct in the oversight of markets, and we have plenty of expertise to offer in this important debate that will materially impact global cleared derivatives markets.
FIA has already been incredibly active in digital asset regulation. In May, I testified before the House Agriculture Committee on the evolving market structure in clearing being offered by new crypto platforms. FIA also participated in a CFTC roundtable in June on this same topic. In September 2021, FIA joined five trade associations in responding to a Basel Committee on Banking Supervision’s (BCBS) consultation on the prudential treatment of digital assets, urging the BCBS to not penalize banks that serve an intermediary role on behalf of clients. In a separate whitepaper on cross-border regulation, FIA called on policymakers and regulators to coordinate in their international response to the growing digital asset markets, to develop an approach to cross-border digital asset trading that does not put unnecessary burdens on regulated entities, and to ensure appropriate customer protections are preserved.
As you can tell, FIA has been actively engaged in shaping the future of digital asset regulations around the globe and stands at the ready to assist US regulators as they debate the proper rules of the road for this innovative and evolving market. I want to applaud the leadership shown by these policymakers in introducing these important bills. The debate has officially begun, and we look forward to offering our expertise in the months ahead.
Hopefully the rest of August is a bit lazier. Stay cool!
More information on key digital asset proposals in the US
- S. 4760, the Digital Commodities Consumer Protection Act of 2022, was introduced in August 2022 by Sen. Debbie Stabenow (D-MI), Chairwoman of the Senate Committee on Agriculture and Sen. John Boozman (R-AR), Ranking Member, along with Sen. Cory Booker (D-NJ) and Sen. John Thune (R-SD).The full text of the bill is available here, in addition to a summary here and a section-by-section overview.
- S. 4356, the Responsible Financial Innovation Act (also known as Lummis-Gillibrand), was introduced in June 2022 by Sen. Cynthia Lummis (R-WY) and Sen. Kirsten Gillibrand (D-NY). This proposal is the most comprehensive in terms of scope, seeking to create the first complete regulatory framework of digital assets in the United States. The full text of the bill is available here, in addition to a section-by-section overview.
- H.R. 7614, the Digital Commodity Exchange Act of 2022 (DCEA) was introduced in April 2022 by Rep. Glenn “GT” Thompson (R-PA), Republican Leader of the House Agriculture Committee, Rep. Ro Khanna (D-CA), Rep. Tom Emmer (R-MN), and Rep. Darren Soto (D-FL). The full text of the bill is available here, in addition to a summary here.
- H.R. 4741, the Digital Asset Market Structure and Investor Protection Act, was introduced in July 2021 by Rep. Don Beyer (D-VA). The full text of the bill is available here.
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