After nearly two decades of Wild West-like freedom, the Senate is coming for the cryptocurrency market. This isn’t the first time legislators have tried to tame the crypto market. The latest effort is led by Sens. Debbie Stabenow (D-MI) and John Boozman (R-AR), the two senators who lead the Senate Agriculture Committee. The bill would allow cryptocurrencies to avoid regulation by the SEC and instead fall under the authority of the Commodities Futures Trading Commission (CFTC). The crypto industry desperately wants to avoid oversight by the SEC, and would likely consider regulation by the CFTC a win. Fatima Hussein and Ken Sweet report in the AP:
It would hand the regulatory authority over Bitcoin and Ether to the Commodities Futures Trading Commission. Stabenow and Boozman lead the Senate Agriculture Committee, which has authority over CFTC.
Bills proposed by other members of Congress and consumer advocates have suggested giving the authority to the Securities and Exchange Commission.
This year, crypto investors have seen prices plunge and companies crater with fortunes and jobs disappearing overnight, and some firms have been accused by federal regulators of running an illegal securities exchange. Bitcoin, the largest digital asset, trades at a fraction of its all-time high, down from more than $68,000 in November 2021 to about $23,000 on Wednesday.
While cryptocurrencies have had crashes before, most recently in 2018, this crash has been broader and more systemic. A major hedge fund filed for bankruptcy earlier this summer, which in turn has caused other cryptocurrency brokers to collapse as well. Some crypto brokers have falsely claimed that their customers’ deposits are backed by deposit insurance, like banks are.
Lawmakers, who have run out of patience with the cryptocurrency industry’s attempts to live out an unregulated Libertarian, bank-free world, are now desperate to implement stringent oversight. The industry spent $9 million in 2021 on lobbying fees, according to a report by Public Citizen, a figure that is certain to be higher with all the Congressional proposals this year.
The Stabenow-Boozman bill would be a win for the cryptocurrency industry, which sees the CFTC as more industry-friendly regulator than the SEC. The CFTC, which had a budget last year of $304 million with roughly 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 Cory Klippsten, CEO of Swan Bitcoin. While an advocate for Bitcoin, Klippsten is deeply skeptical of much of broader crypto industry, which has produced a myriad of tokens and other coins that he considers to be nothing more than scams.
Action Line: You have to ask yourself why the crypto industry is so eager to avoid oversight by the SEC. What are they hiding? The volatile swings in crypto markets make the products more suitable for speculators than investors. If you want to avoid the gut-wrenching volatility of cryptocurrency markets, and instead build a portfolio of stocks and bonds that generate income for you, I would love to talk with you. If you want to get to know me better before our discussion, click here to subscribe to my free monthly Survive & Thrive letter.
