Speaking of crypto regulation, the US Senate might be close to passing it for the first time ever. This isn’t a joke bill either, with heavy bipartisan support existing. The Senate Agriculture Committee is planning to propose legislation that would assign oversight of Bitcoin and Ethereum to the Commodity Futures Trading Commission, which regulates derivatives like futures and swaps. This is important because there has been a battle between federal agencies on who should be in charge of jurisdiction due to the possible benefits. Crypto is a growing beast and having that responsibility would provide them with bigger budgets to work with. All of a sudden, there’s a turf war between the SEC, the Federal Reserve, and the CFTC, but this bill seems to have the most potential out of previous ones.
If this bill passes, digital commodity platforms would have to register as trading facilities or brokers. Crypto exchanges like Coinbase and FTX fall under this definition, and they would have to monitor trading while protecting investors from assets that could undergo market manipulation. Those are basics though, and if the CFTC gets jurisdiction like what’s currently proposed, they will have to write a whole new set of rules to protect investors. The timetable for this would be unknown, and the rules might not succeed when executed. It’s important to note that because regulation is inevitable, crypto companies are looking for the agency that will have less of an impact on them. Interestingly enough, Coinbase and FTX have been lobbying for Congress to create this digital commodity category and have the CFTC run it. This is because commodities are a broader term that don’t face full regulation, and the CFTC rules will likely be easier to comply with than the SEC, where they face securities law. Bitcoin and Ethereum haven’t reacted much, but further negotiations will decide if they get what they want.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.