By FATIMA HUSSEIN and KEN SWEET – Associated Press
WASHINGTON (AP) — After 13 years, at least three crashes, dozens of scams and Ponzi schemes, and hundreds of billions of dollars made and evaporated, cryptocurrencies are finally getting the full attention of Congress, whose lawmakers and lobbyists have lined Capitol Hill with proposals on how to regulate the industry.
The latest bipartisan proposal came Wednesday from Sen. Debbie Stabenow, D-Michigan, and top Republican member, Sen. John Boozman of Arkansas, that would hand over regulatory authority for Bitcoin and Ether to the Commodities Futures Trading Commission. That would be in contrast to bills proposed by other members of Congress and consumer advocates, who have suggested giving power to the Securities and Exchange Commission.
This year, crypto investors have seen prices plunge and businesses collapse with fortunes and jobs disappearing overnight, and some companies have been accused by federal regulators of running an illegal stock exchange. Bitcoin, the largest digital asset, is trading at a fraction of its all-time high, dropping from over $68,000 in November 2021 to around $23,000 on Wednesday.
People also read…
While cryptocurrencies have had crashes before, most recently in 2018, this crash was broader and more systemic. A major hedge fund filed for bankruptcy earlier this summer, which also caused the collapse of other cryptocurrency brokers. Some crypto brokers have falsely claimed that their clients’ deposits are covered by deposit insurance like a bank.
Lawmakers, who have lost patience with the cryptocurrency industry’s attempts to live in an unregulated, bankless, libertarian world, are now desperate to implement strict oversight. The industry spent $9 million in 2021 on lobbying fees, according to a report by Public Citizen, a figure that is sure to be higher with any proposals from Congress this year.
The Stabenow-Boozman bill would be a victory for the cryptocurrency industry, which views the CFTC as a more industry-friendly regulator than the SEC. The CFTC, which had a budget last year of $304 million with about 666 employees, is a fraction of the size of the SEC, which had a budget of nearly $2 billion and 4,500 full-time employees.
“(The cryptocurrency industry) is trying to get anyone other than the SEC to regulate them,” said Swan Bitcoin CEO Cory Klippsten. Although he champions Bitcoin, Klippsten is deeply skeptical of much of the broader crypto industry, which has produced myriad tokens and other coins that he views as nothing. more than scams.
At a press conference, both Stabenow and Boozman acknowledged that while they believe the CFTC is up to the task of regulating cryptocurrencies, the agency would need support. The bill attempts to alleviate this problem by imposing user fees on the crypto industry, which in turn would fund more robust oversight of the industry by the CFTC.
“Obviously, if the CTFC is to move aggressively in this area, it will need more resources,” Stabenow said.
The legislation may be added to the list of proposals that have come out of Congress this year. The senses. Cory Booker, DN.J., and John Thune, RS.D., are also co-sponsors of the Stabenow-Boozman bill. Booker has publicly defended the cryptocurrency industry, particularly because black Americans and other racial minorities are statistically more likely to invest in crypto than traditional investments like stocks and bonds.
Sen. Pat Toomey, R-Pa., introduced legislation in April, called the Stablecoin TRUST Act, that would create a framework to regulate stablecoins, which have suffered massive losses this year. Stablecoins are a type of cryptocurrency tied to a specific value, usually the US dollar, another currency, or gold.
In addition, in June, Sens. Kirsten Gillibrand, DN.Y., and Cynthia Lummis, R-Wyo., proposed a vast bill, known as the Responsible Financial Innovation Act. This bill proposed legal definitions of digital assets and virtual currencies; require the IRS to adopt guidelines on merchant acceptance of digital assets and charitable contributions; and would distinguish between digital assets that are commodities and those that are securities, which has not been done.
Along with the Toomey legislation and the Lummis-Gillibrand legislation, a proposal is being worked on in the House Financial Services Committee, although those negotiations have stalled.
Committee Chair Maxine Waters, D-California, said last month that if she, top Republican member Patrick McHenry of North Carolina and Treasury Secretary Janet Yellen had made considerable progress towards an agreement on the legislation, “unfortunately we are not there yet, and we will therefore continue our negotiations during the August recess”.
President Joe Biden’s Financial Markets Task Force released a report last November calling on Congress to pass legislation that would regulate stablecoinsand Biden earlier this year released an executive order calling on various agencies to seek ways to regulate digital assets.
Follow AP’s coverage of the cryptocurrency industry at https://apnews.com/hub/cryptocurrency.
Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.