Yesterday the US Senate Agriculture Committee published a discussion draft for a bipartisan crypto market structure bill. Republican Committee Chair John Boozman and Democrat Senator Cory Booker jointly released the draft. It gives the Commodity Futures Trading Commission (CFTC) the authority to regulate digital commodities and builds on the Clarity Act, which was approved by the House in July.
In the meantime, Acting CFTC Chair Caroline Pham is progressing matters, with a view to enabling exchanges to support cryptocurrencies, including using leverage in trading.
The Senate Banking Committee also published draft legislation in July, the Responsible Financial Innovation Act (RFI Act). The Agriculture bill focuses on CFTC regulated assets, whereas the RFI Act targets those under SEC supervision. Certain cryptocurrencies such as Bitcoin and Ethereum will be considered to be digital commodities with related activities under CFTC supervision. The RFI Act defined a new term for quasi crypto securities, ‘ancillary assets’, which will be supervised by the SEC. However, they will not be regulated the same as securities.
The Agriculture Committee draft includes regulations for digital commodity spot markets, and requirements to manage fund segregation, conflicts of interest, customer disclosures, as well as prohibitions on affiliated trading. One of the key aspects is the definition of a digital commodity, with exclusions making up the bulk of the definition. A digital commodity is primarily defined as a fungible asset that can be transferred p2p using a distributed ledger. But that could apply to many assets, so the exclusions include securities, security derivatives, stablecoins, deposits, funds, conventional commodities and their derivatives, and others.
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