US crypto oversight legislation has bipartisan support as industry worries about potential impact
- Lawmakers and lobbyists have papered Capitol Hill with proposals for crypto regulations that could determine which agency is given oversight
- The latest bill would grant oversight to the Commodities Futures Trading Commission, seen as more industry friendly than the Securities and Exchange Commission
After 13 years, at least three crashes, dozens of scams and Ponzi schemes and hundreds of billions of dollars made and evaporated, cryptocurrencies finally have the full attention of Congress, whose lawmakers and lobbyists have papered Capitol Hill with proposals on how to regulate the industry.
The latest bipartisan proposal came Wednesday from Senators Debbie Stabenow, D-Michigan, and John Boozman, R-Arkansas. It would hand the regulatory authority over bitcoin and ether to the Commodities Futures Trading Commission. Stabenow and Boozman lead the Senate Agriculture Committee, which has authority over CTFC.
Bills proposed by other members of Congress and consumer advocates have suggested giving the authority to the Securities and Exchange Commission.
This year, crypto investors have seen prices plunge and companies crater with fortunes and jobs disappearing overnight, and some firms have been accused by federal regulators of running an illegal securities exchange. Bitcoin, the largest digital asset, trades at a fraction of its all-time high, down from more than US$68,000 in November 2021 to about US$23,000 on Wednesday.
While cryptocurrencies have had crashes before, most recently in 2018, this crash has been broader and more systemic. A major hedge fund filed for bankruptcy earlier this summer, which in turn has caused other cryptocurrency brokers to collapse as well. Some crypto brokers have falsely claimed that their customers’ deposits are backed by deposit insurance, like banks are.
Lawmakers, who have run out of patience with the cryptocurrency industry’s attempts to live out an unregulated Libertarian, bank-free world, are now desperate to implement stringent oversight. The industry spent US$9 million in 2021 on lobbying fees, according to a report by Public Citizen, a figure that is certain to be higher with all the Congressional proposals this year.
The Stabenow-Boozman bill would be a win for the cryptocurrency industry, which sees the CFTC as more industry-friendly regulator than the SEC. The CFTC, which had a budget last year of US$304 million with roughly 666 employees, is a fraction of the size of the SEC, which had a budget of nearly US$2 billion and 4,500 full-time employees.
“(The cryptocurrency industry is) trying to get anyone other than the SEC to regulate them,” said Cory Klippsten, CEO of Swan Bitcoin. While an advocate for bitcoin, Klippsten is deeply sceptical of much of broader crypto industry, which has produced a myriad of tokens and other coins that he considers to be nothing more than scams.