A bipartisan discussion draft of a bill by Sen. John Boozman (R-AR) and Sen. Cory Booker (D-NJ) proposes giving primary oversight of cryptocurrency to the Commodity Futures Trading Commission, lessening the jurisdiction of the Securities and Exchange Commission. Determining the appropriate regulator to handle cryptocurrency has been at issue for several years.
Recently, SEC Chairman Paul Atkins announced that the SEC and CFTC were working to "harmonize" their crypto regulatory regimes to avoid uncertainty resulting from conflicting SEC and CFTC rules, and to drive innovation. Boozman and Booker’s bill appears to be a proposal of just how that "harmonization" would work, and in some part mirrors the Clarity Act that already passed in the U.S. House of Representatives.
Democrats, including Booker have reservations about tasking the CFTC, which regulates commodities and commodity derivatives, with oversight of cryptocurrency and crypto markets. One concern is whether the CFTC will have adequate capacity to handle the fast-growing digital currency. The bill would give CFTC regulatory authority over the crypto market structure, classification of individual cryptocurrencies as digital commodities, creation of registration requirements, and the discretion to require certain disclosures and assess new fees on certain crypto transactions. While the CFTC is a bipartisan commission, a series of resignations have left a single commissioner at the helm of the agency. Cuts in staff across the federal government have also eliminated a significant portion of the staff.
Transferring primary crypto oversight to the CFTC is favored by President Donald Trump, congressional Republicans, and the industry in general. There is Democratic support in both houses of Congress for advancing more comprehensive crypto regulation, though concerns remain regarding the sufficiency of anti-money laundering protections and adoption of other safeguards that apply to traditional financial markets.
The bipartisan bill leaves many of these questions unresolved. It must pass through the Senate Agriculture Committee that oversees the CFTC, and the Senate Banking Committee, before any meaningful development of a crypto market structure can begin.
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