Regulations for Bitcoin, another sought-after cryptocurrency in Congress

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A senior House Republican seeks to regulate cryptocurrencies, including Bitcoin and Ethereum, by setting clear jurisdictions on how government oversees the industry – a new financial frontier.

“We have the opportunity and the responsibility to be leaders in the digital asset space to protect consumers, drive innovation and reduce regulatory burdens,” said Glenn “GT” Thompson (R-Pa.) , ranking member of the House Agriculture Committee, which will publish a draft discussion text on Tuesday. Its panel oversees the commodity markets.

This move is an opening offer to achieve bipartisan consensus on how to regulate a new and evolving form of money. GOP staff members who helped craft the proposal said Thompson hopes it will spark discussions with fellow Democrats.

Cryptocurrency, a digital currency that appeared in the 21st century, works thanks to investments. It’s somewhat similar to the traditional stock market, as described by the Nasdaq Stock Market Inc. Lawmakers, whose views on cryptocurrency range from skepticism to idealism, are trying to clarify a booming market, which currently operates with vague rules.

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More than one in 10 Americans bought or traded cryptocurrency from June 2020 to June 2021, according to a survey by NORC, a research organization at the University of Chicago.

Cryptocurrency uses blockchain, a type of technology that acts like a ledger to track transactions, reports IBM Corp. Blockchain is decentralized, so it is not based on a particular system, but on a network. Decentralization makes it easier to retrieve data and does not require trust between network members because everyone has access to the exact same record of information, argues the Blockchain Council.

Mario Tama / Getty Images

A Bitcoin ATM sits in a 7-Eleven store in Los Angeles as the price of the cryptocurrency skyrocketed on November 10, 2021.

Bitcoin was the first decentralized cryptocurrency, created in the wake of the Great Recession of 2008 by Satoshi Nakamoto. It is believed that the name of the inventor is a pseudonym. Other popular cryptocurrencies include Ethereum, Binance Coin, and Solana.

The House and Senate agriculture panels oversee the Commodity Futures Trading Commission. The independent federal agency regulates commodity futures and swap markets, agreements between two parties to exchange cash flows in the future based on an underlying price or instrument.

Thompson said he hoped to involve this group of lawmakers in cryptocurrency oversight. His draft text aims to solicit feedback from stakeholders, regulators and lawmakers “to ensure that we advance the best possible framework as American innovators build the next generation of digital infrastructure,” he said. in a press release.

Because the bill has not yet been officially introduced, there is a shortage of cosponsors.

Draw clear jurisdictions

Thompson’s measure would bridge the gap between the CFTC and the US Securities and Exchange Commission by setting clear jurisdictions on how the government oversees cryptocurrency. This would extend the existing CFTC framework to digital products, allowing the agency to register and regulate them as a new type of entity.

Federal requirements would then fall on a registered digital trading exchange. The terms would involve monitoring business activity, prohibiting abusive business practices, publicly disclosing business information, etc.

While registration would be voluntary, the proposal would offer incentives, including collaboration with a single regulator and eligibility to provide leveraged trading.

The SEC’s role in the process remains to be determined, a Republican political staffer said. But the commission would continue its responsibility to monitor entities that raise funds – in this case to develop a digital product project, ensuring that they comply with relevant securities laws.

The “holding power” of Crypto

The typical cryptocurrency investor is under 40 and does not have a college degree, the NORC survey reports. People interested in cryptocurrency come from diverse backgrounds as 44% of traders do not identify as white and 41% are women.

However, questions remain from the general public about how cryptocurrency works. The main reason why respondents to the NORC survey did not invest money in cryptocurrency is because they said they did not understand it enough.

“Cryptocurrencies may have stamina as an investment option, but our hunch is that they will continue to lag behind more traditional investment opportunities for the foreseeable future,” said Mark Lush, manager. of NORC’s Economics, Justice and Society Department, in a press release for the investigation.

Tesla Inc. CEO Elon Musk is among the public figures outspoken about experimenting with crypto. The billionaire warns against caution.

“Don’t bet the farm on crypto!” he tweeted on October 24. “The real value is creating products and providing services to your fellow human beings, not money in any form.”

To contact the reporter on this story: Megan U. Boyanton in Washington at [email protected]

To contact the editors responsible for this story: Fawn Johnson at [email protected]; Robin Meszoly at [email protected]

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