Bipartisan crypto regulatory overhaul would treat most digital assets as commodities under CFTC oversight

“My home state of Wyoming has gone to great lengths to lead the nation in digital asset regulation, and I want to bring that success to the federal level,” Lummis said in a press release. “As this industry continues to grow, it is critical that Congress carefully crafts legislation that promotes innovation while protecting the consumer against bad actors.” 

Gillibrand said their bill will “provide clarity to both industry and regulators, while also maintaining the flexibility to account for the ongoing evolution of the digital assets market,” according to the press release.

The CFTC and SEC together regulate wide swaths of the U.S. markets and act as two powerful Wall Street watchdogs. The former oversees the purchase and sale of raw commodities like corn, coffee, gold and oil, while the latter polices companies, executives and securities that seek to raise capital from the public.

Daniel Kahan, a lawyer in King Spalding’s cryptocurrency and blockchain group, told CNBC that the legislation is likely a welcome development for investors who believe that the SEC’s rules don’t make much sense for decentralized digital tokens.

“In part, it’s because the securities regulatory regime is so prescriptive,” Kahan, who often represents financial technology companies, told CNBC. “There’s a focus on all of these technical elements of the regime around reporting and trading and other things that are not directly tied to fraud.”

The belief is that the CFTC “would be much more appropriate to focus on investor protection and anti-fraud and anti-market-manipulation-type issues rather than on these very technical prescriptive elements of the current securities law regime,” he added.

Aides for both senators touted key features of the bill in a call with reporters, including certain tax exemptions that would shield stablecoin holders from having to report income changes each time they make a purchase with digital currency. 

Other new disclosures would inform investors about issuers’ experience developing digital assets, the price history of issuers’ prior assets, anticipated costs, and descriptions of the management teams and liabilities of each issuer. 

While it is up to Congress to decide how government agencies police U.S. markets, the SEC and its chairman, Gary Gensler, had for more than a year led the public crusade in support of tighter crypto rules. 

“Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending,” Gensler told lawmakers in September. “Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted.” 

Article source: https://www.cnbc.com/2022/06/07/bipartisan-crypto-bill-lummis-and-gillibrand-want-to-empower-cftc-treat-digitals-assets-like-commodities.html