Coinbase “very supportive” of granting CFTC exclusive jurisdiction over Bitcoin and Ethereum


Crypto policy discussions in the United States tend to revolve around rumblings from the Securities and Exchange Commission and taxes.

But there are two bills in Congress that have largely slipped under the radar, at least to people outside the political crowd. They would decisively give more power to the Commodities Futures Trading Commission. Additionally, they received a warm endorsement from Coinbase’s US policy manager, Kara Calvert.

“We strongly support two efforts, one in the House, one in the Senate, that would give ad hoc authority to the CFTC. It’s by Senators Stabenow and Boozman, and Reps. Thompson and Khanna in the House,” Calvert said. Decrypt during an interview at the Messari Mainnet conference in New York.

Having point-in-time authority would mean that the CFTC oversees real-time trading on crypto exchanges, such as when someone buys Bitcoin with US dollars or trades Ethereum for a token on Coinbase or FTX.

The CFTC already shares regulatory oversight of derivatives, such as futures, with the SEC.

Futures contracts are a type of investment product that allows traders to bet on whether the price of an asset will rise or fall at a future date. And they became increasingly popular with crypto investors. In fact, crypto exchanges, Coinbase, and FTX have all made their voices heard whenever they have acquired companies with existing CFTC licenses.

The distinction between spot and futures trading – and which regulator has jurisdiction over them – has been important.

Just yesterday, SEC Chairman Gary Gensler makes the case that the vast majority of crypto assets are considered securities and exchanges should register with the SEC.

“Since most crypto tokens are securities, it follows that many crypto intermediaries transact in securities and must register with the Securities and Exchange Commission (SEC) in some capacity,” he said in a statement ahead of the meeting of the Financial Stability Supervisory Board.

He later added that “crypto intermediaries” like exchanges may need to register with both the SEC and the CFTC. But the two bills Calvert pointed to both specify that the CFTC would have exclusive jurisdiction over “digital goods.”

“These bills attempt to get to the heart of what an insecurity is and how do we regulate that in a smart way that enables innovation,” Calvert said.

There has been a lot of fuss in crypto over the so-called Howey test, a four-pronged assessment that regulators and courts use to decide whether an asset qualifies as a security under US federal law. . Over the summer, in a lawsuit against a former Coinbase employee accused of insider tradingthe SEC has revealed that it believes at least nine assets that traded on Coinbase are unregistered securities, which would mean that Coinbase and the issuers of the assets could be in violation of federal law.

Meaning. Debbie Stabenow (D-MI) and John Boozman (R-AR) presented their Digital Products Consumer Protection Act 2022 in August. The bill very ostensibly calls Bitcoin and Ethereum “digital commodities,” as opposed to securities, and indicates that the CFTC would have exclusive jurisdiction over them.

Following the introduction of the bill, The Washington Post reported Boozman said on a press call that he’s heard from the crypto industry that they “almost universally” prefer to be regulated by the CFTC.

The bill also indicates that the CFTC’s jurisdiction would not include crypto transactions for goods and services, such as using Bitcoin to buy a cup of coffee. Stabenow and Boozman’s bill was last discussed in the Senate Agriculture and Banking Committees on September 15, but no amendments or new versions have been tabled.

In the House of Representatives, Representatives Ro Khanna (D-CA), Glenn Thompson (R-PA), Tom Emmer (R-MN) and Darren Soto (D-FL) have a similar bill pending, the Digital Goods Exchange Act 2022. It was presented in April, then referred to the commodity exchanges subcommittee in early May.

The House bill, like its Senate counterpart, would update the Commodity Exchange Act to define digital goods as “any form or fungible incorporeal movable property that can be exclusively possessed and transferred from person to person without necessarily depend on an intermediary” and give the CFTC sole jurisdiction for their regulation.

Blockchain Association Executive Director Kristin Smith said she is also watching two bills that would clarify the CFTC’s role in crypto regulation.

“The commodity spot market, there’s a lot of work going on behind the scenes right now,” Smith said. Decrypt at the Mainnet conference.

She is more optimistic about the Trust Actintroduced in March by Sen. Pat Toomey (R-Pa.), which would set rules for stablecoin issuers.

“The stablecoin is looking really good,” Smith said.

The short text of the bill would require centralized issuers, such as Tether and Circle, to back their stablecoins with fiat currency or high-quality government securities that mature in 12 months or less. It also requires issuers to publish reports on their reserves every 30 days. So far, there has been no further action on the stablecoin bill.

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