Senators Introduce Digital Assets Legislation

Senate Agriculture Committee Chair Debbie Stabenow (D-MI) and Committee Ranking Member John Boozman (R-AR) along with two additional Senators introduced the bipartisan “Digital Commodities Consumer Protection Act of 2022” which would give the CFTC new authority to regulate digital assets. The legislation would place the CFTC in the lead oversight role for Bitcoin and Ether and require all digital commodity platforms—including trading facilities, brokers, dealers, and custodians—to register with the CFTC. The bill would also require digital commodity platforms to address abusive trading practices, conflicts of interest, advertising standards, and disclose risks to investors, among other requirements. The CFTC would also be permitted to charge user fees to platforms to fund its new oversight role. In a statement, CFTC Chair Rostin Behnam was supportive of the measure and noted, “We are at a critical inflection point where new legislative authority is needed to clarify ambiguities and provide a regulatory framework to the digital commodity market that protects customers, provides market integrity and certainty, and ensures financial stability.”

The Senate and House Agriculture Committees have jurisdiction over the CFTC, and the agency itself is responsible for the enforcement of the Commodity Exchange Act (CEA) under which it regulates the trading of commodity futures. Over the last several months, numerous bills have been introduced addressing crypto markets, including legislation authored by Senator Kirsten Gilligrand (D-NY) and Senator Cynthia Lummis (R-WY) which focuses on clarifying which digital assets would be commodities versus securities. Members of the Senate Banking Committee as well as members of the House Financial Services Committee (which have jurisdiction over the SEC) have proposed legislation as well as ideas to streamline regulation in the digital asset space. Legislation regulating the digital asset space is not likely to pass this Congress; however, the language from these bills is likely to be a starting point for future legislation in the next Congress. As investment in digital assets continues to increase, the CFTC (led by Behnam) and SEC (led by Chair Gary Gensler) have both focused on the role their respective agencies can play to oversee the digital asset market for investors- with both staking their own claim through enforcement and guidance.

Click here to read a one-pager from Senator Stabenow on the “Digital Commodities Consumer Protection Act of 2022.”

Click here to read a section-by-section summary of the “Digital Commodities Consumer Protection Act of 2022.”