A bipartisan group of US senators has introduced legislation that would provide the Commodity Futures Trading Commission with new tools and authorities to regulate digital commodities. This mandatory framework will protect customers and our markets.
The Digital Products Consumer Protection Act 2022 aims to protect markets in several ways. It closes regulatory loopholes by requiring all digital commodity platforms, including trading facilities, brokers, traders, and custodians, to register with the CFTC. Additionally, digital product platforms must prohibit abusive business practices, eliminate or disclose conflicts of interest, maintain sufficient financial resources, have strong cybersecurity programs, protect customer assets, and report suspicious transactions.
Additionally, it requires digital product platforms to adhere to advertising standards and disclose information about digital products and their risks, bringing greater transparency and accountability to the marketplace. In addition, it authorizes the CFTC to impose user fees on digital product platforms to fully fund its oversight of the digital product market. It also directs the CFTC to review the racial, ethnic, and gender demographics of customers participating in digital commodity marketplaces and use that information to inform its rulemaking and provide information to customers.
“One in five Americans have used or traded digital assets, but these markets lack the transparency and accountability they expect from our financial system. Too often, it puts Americans’ hard-earned money at risk,” said U.S. Senator Debbie Stabenow (D-MI), chair of the Senate Agriculture, Nutrition, and Forestry Committee. “That’s why we’re closing regulatory loopholes and requiring these markets to operate under simple rules that protect customers and keep our financial system safe.”
Stabenow is one of the bill’s sponsors, along with John Boozman (R-AR), a ranking member of the Senate Agriculture, Nutrition and Forestry Committee.
“Digital assets and blockchain technology have already and will continue to change the way global markets work. Yet this fast-growing industry is currently governed largely by a patchwork of state-level regulations. It’s just not an effective way to protect consumers from fraud. Also, relying solely on state regulation does not guarantee that rules and regulations will work for all stakeholders. Our bill will give the CFTC exclusive jurisdiction over the market spot digital products, which will lead to more consumer safeguards, market integrity, and innovation in the digital product space,” Boozman said.
US Sense. Cory Booker (D-NJ) and John Thune (R-SD) are also sponsors of the bill.
“As the number of Americans using digital assets continues to grow, it’s critical that we clarify and strengthen the regulation of our financial system,” Booker said. “This bipartisan legislation will strengthen oversight of digital products, which will be an important first step in ensuring the digital market operates fairly with common sense rules in place and protects consumers entering this market.”