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A staffer for U.S. Senator Cynthia Lummis thinks that if the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) can't agree on who is in charge of regulating cryptocurrencies, the U.S. Congress will have to step in and decide.
The problem started in 2014, when the CFTC said for the first time that it had power over virtual currencies. This was later confirmed by a 2018 ruling by the U.S. Federal Court, which said that the CFTC had the power to go after fraud cases involving virtual currencies. But so far, most of the investigations into crypto exchanges and crypto assets in the U.S. have been done by the SEC.
The Digital Commodities Consumer Protection Act of 2022 was introduced on August 3 by Senators Debbie Stabenow of Michigan and John Boozman of Arkansas (DCCPA). If the bill is signed into law by the U.S. Congress, the CFTC would be able to regulate digital commodities.
Most importantly, the DCCPA would classify both Bitcoin (BTC) and Ether (ETH) as digital commodities instead of securities. This is especially important because SEC chairman Gary Gensler recently told U.S. business news channel CNBC that BTC is the only cryptocurrency he feels comfortable calling a commodity:
"Some, like Bitcoin—and that's the only one I'll say because I won't talk about any of these tokens—have been called commodities by my predecessors and others. "
But Lummis's staffer thinks the DCCPA bill has less than a 50% chance of passing this year, despite the tension:
"Neither bill will pass this year unless a catastrophic "black swan" event like the collapse of a major U.S. exchange brings lawmakers together."
The news comes after the SEC started looking into the $20 billion cryptocurrency exchange Coinbase. A staffer for Lummis also said that every cryptocurrency exchange in the U.S. is being looked into in some way.
The Howey test is used to decide if a deal is an investment contract under U.S. law (security). The test says that an investment contract exists "when money is put into a joint venture with the reasonable expectation that profits will come from the work of others."
If ETH or any other crypto asset is found to fit this definition, then crypto exchanges in the U.S. would be trading securities illegally. Nine crypto-assets are now on the SEC's list of securities.
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