Bipartisan bill introduced to give CFTC additional crypto oversight

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As digital assets have become more popular in recent years, the debate as to how regulators should classify them has continued. The Securities and Exchange Commission does not consider the two biggest cryptocurrencies — bitcoin and ethereum — to be securities, but there is less certainty regarding smaller cryptocurrencies.

SEC Chairman Gary Gensler has been critical of cryptocurrencies over the last year. He has said multiple times, including at an October hearing before the House Financial Services Committee, that there is not enough “investor protection in the crypto finance, issuance, trading or lending area.” He has liked the cryptocurrency market to the Wild West and has asked Congress for additional authority to prevent transactions, products and platforms from falling between regulatory cracks.

The bill introduced in the House does not interrupt the SEC’s jurisdiction over cryptocurrencies deemed securities or over digital assets that represent some form of ownership or investment in a business.

However, if a digital asset does not convey rights and obligations typically associated with a security, then it is considered a digital commodity and subject to the CFTC’s regulatory regime as provided under the bill, the fact sheet notes.

The bill defines “digital commodity” as “any form of fungible intangible personal property that can be exclusively possessed and transferred person to person without necessary reliance on an intermediary.”

“As digital assets continue to grow in use and importance throughout the world, it is critical Congress take legislative action to promote sensible regulation and define how these markets should be regulated,” Mr. Thompson, ranking member on the House Agriculture Committee, which has jurisdiction over the commodity markets, said in the news release. This “legislation is a culmination of years of work to define a framework that fosters innovation, protects consumers and reduces regulatory uncertainty.”

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