New legislation to control cryptocurrency arrives as industry shakes

After 13 years, at least three incidents, dozens of scams and Ponzi schemes and hundreds of billions of dollars made and evaporated, cryptocurrencies are finally getting the attention of Congress, whose lawmakers and their lobbyists have provided Capitol Hill with proposals for how to regulate the industry.

The latest bipartisan proposal came on Wednesday from Michigan Senator Debbie Stabeno and John Bozeman, R-Ak. Regulatory authority over Bitcoin and Ether will be handed over to the Commodity Futures Trading Commission. Stabenow and Boozman lead the Senate Agriculture Committee, which has authority over the CTFC.

Bills proposed by other members of Congress and consumer advocates have suggested giving power to the Securities and Exchange Commission.

This year, cryptocurrency investors witnessed Prices are falling and companies are the crater of the volcano With wealth and jobs disappearing overnight, federal regulators have accused some companies of running an illegal stock exchange. Bitcointhe largest digital asset, is trading at a fraction of its all-time high, dropping from over $68,000 in November 2021 to around $23,000 on Wednesday.

While cryptocurrencies have had crashes before, most recently in 2018, this crash has been broader and more systematic. One major hedge fund filed for bankruptcy earlier this summer, which in turn caused others to go bankrupt. Cryptocurrency brokers to collapse like that. Some cryptocurrency brokers mistakenly claim that their clients’ deposits are backed by deposit insurance, such as banks.

Legislators who have impatient With the cryptocurrency industry trying to survive in a world without unregulated libertarian banks, it is now in dire need of implementing strict supervision. The industry spent $9 million in 2021 on lobbying fees, according to Report by Public Citizena number that is sure to be higher with all of this year’s Congressional proposals.

The Stabenow-Boozman bill would be a win for the crypto industry, which sees the CFTC as a more favorable regulator for the industry than the SEC. The Commodity Futures Trading Commission, which last year had a budget of $304 million with roughly 666 employees, is a fraction of the size of the Securities and Exchange Commission, which has a budget of nearly $2 billion and 4,500 full-time employees.

“(The cryptocurrency industry) is trying to get anyone other than the Securities and Exchange Commission to regulate it,” said Cory Klebstein, CEO of Swan Bitcoin. While he has been a defender of Bitcoin, Klippsten is deeply suspicious of much of the broader crypto industry, which has produced countless other coins and coins that he considers nothing more than scams.

Crypto tycoon Sam Bankman-Fried, who has donated millions of dollars to Democratic-leaning candidates and PACs, tweeted his support for the Stabenow-Boozman bill.

In a call with reporters, Bozeman said the industry’s preferred option for regulating cryptocurrency is the CFTC.

“They are somewhat united on this,” he said.

At a press conference, Stabenow and Boozman acknowledged that while they believe the CFTC is up to the task of regulating cryptocurrency, the agency will need support. The CFTC already oversees futures contracts for Bitcoin and Ethereum, and the bill attempts to mitigate issues related to employment by charging user fees to the crypto industry. This money will in turn fund more robust oversight of the industry by the CFTC. The bill would leave crypto-like products, such as tokens or non-fungible tokens (NFTs), until the SEC can assert its regulatory authority.

“It is clear that if the CTC is to act aggressively in this area, it will need more resources,” Stabeno said.

There has been a growing list of proposals from Congress this year that try in various ways to tackle problems in the cryptocurrency industry. Senator Pat Toomey, R-P., in April introduced legislation called the Stablecoin TRUST Act, which would create a framework for regulating stablecoins, which have seen massive losses this year. A stablecoin is a type of cryptocurrency that is pegged to a specific value, usually the US dollar, another currency, or gold.

In June, Senators Kirsten Gillibrand, DNY, and Cynthia Lummis, R-Wyo. Propose a large-scale bill It’s called the Responsible Financial Innovation Act. The bill proposed legal definitions of digital assets and virtual currencies; May require the IRS to adopt guidelines on merchant acceptance of digital assets and charitable contributions; It will distinguish between digital assets that are commodities and those that are securities, which has not been done.

Senator Cory Booker, DN.J. , and John Thune, RS.D, are also sponsors of the Stabenow-Boozman Bill. Along with the Toomey legislation and the Lummis-Gillibrand legislation, a proposal is being put in place in the House Financial Services Committee, though those negotiations have faltered.

Committee Chair Maxine Waters, a Democrat from California, said last month that while she is Senior Republican Patrick McHenry of North Carolina and Treasury Secretary Janet Yellen We’ve made significant progress toward reaching agreement on the legislation, “we’re unfortunately not there yet, so we will continue our negotiations during the August recess.”

Last November, President Joe Biden’s Working Group on Financial Markets released a report calling on Congress to pass legislation that would Regulating stablecoinsBiden issued earlier this year executive order Invite a variety of agencies to consider ways to regulate digital assets.