After 13 years, at least three market crashes, dozens of scams and Ponzi schemes, and the creation and loss of hundreds of billions of dollars, cryptocurrencies have finally garnered the full attention of Congress.
The lawmakers and lobbyists of Congress have papered Capitol Hill with proposals on how the industry should be regulated.
Sens. Debbie Stabenow (D-Michigan) and John Boozman (R-Ark), who are both members of the Senate, presented the most recent proposal from both parties on Wednesday.
The Commodity Futures Trading Commission would take over the regulatory responsibilities for Bitcoin and Ether if this bill were passed. The Senate Agriculture Committee, which has jurisdiction over CTFC, is chaired by Senators Stabenow and Boozman.
The idea of giving that authority to the Securities and Exchange Commission has been included in bills that have been proposed by other members of Congress and consumer advocates.
During this year, cryptocurrency investors have witnessed a fall in price as well as a collapse in the value of companies, which has led to the disappearance of fortunes as well as jobs overnight.
In addition, federal regulators have accused certain businesses of operating an illegal securities exchange. Bitcoin, the most valuable digital asset, is currently trading at a price that is a small fraction of its all-time high.
The price of Bitcoin has dropped from more than $68,000 in November 2021 to approximately $23,000 today.
Even though cryptocurrencies have experienced crashes in the past, the most recent one occurring in 2018, this crash is more widespread and systemic.
At the beginning of this summer, a significant hedge fund filed for bankruptcy, which led to the failure of several other cryptocurrency brokerages.
A few cryptocurrency brokers have made the misleading claim that the deposits made by their clients are protected by deposit insurance, just like deposits made at traditional financial institutions are.
Legislators, who have run out of patience with the cryptocurrency industry’s attempts to live in an unregulated Libertarian and bank-free world, are now desperate to implement stringent oversight because they fear the industry will collapse.
According to a report by Public Citizen, the industry spent $9 million on lobbying fees in 2021, a figure that is certain to be higher with all of the proposals being considered by Congress this year.
The cryptocurrency industry would benefit from the Stabenow-Boozman legislation, as it considers the CFTC to be a more industry-friendly regulator than the SEC.
In comparison to the Securities and Exchange Commission (SEC), which had a budget of nearly $2 billion and 4,500 full-time employees, the Commodity Futures Trading Commission (CFTC) only had a budget of $304 million and approximately 666 employees last year.
According to Cory Klippsten, CEO of Swan Bitcoin, “(The cryptocurrency industry is) trying to get anyone other than the SEC to regulate them.” [Citation needed] Klippsten is a supporter of Bitcoin, but he has a healthy scepticism toward the vast majority of the wider cryptocurrency industry.
This industry has given rise to a wide variety of tokens and other coins that he considers to be nothing more than fraudulent schemes.
The cryptocurrency billionaire Sam Bankman-Fried tweeted his support for the Stabenow-Boozman bill. Bankman-Fried is known for donating millions of dollars to candidates and super PACs that lean Democratic.
During a call with reporters, Boozman stated that the CFTC is the organization that the industry would most like to see entrusted with the responsibility of regulating cryptocurrency.
“They are fairly united on this,” he said. “They all pretty much agree.”
Both Stabenow and Boozman admitted during a press conference that even though they believe the Commodity Futures Trading Commission (CFTC) is capable of the task of regulating cryptocurrencies, the agency would need support to be successful in doing so.
Futures contracts for Bitcoin and Etherium are already regulated by the CFTC. The proposed legislation seeks to address concerns regarding staffing by requiring the cryptocurrency industry to pay user fees.
These funds, in turn, would allow for the CFTC to exercise more stringent oversight over the industry. The SEC would have the authority to potentially exercise its regulatory authority over crypto-like products such as tokens or non-fungible tokens (NFTs) if this bill were to become law.
Stabenow stated that additional resources will be required if the CTFC is going to be aggressive in this area. “It is obvious that they are going to need more resources,”
Consumers are still interested in investing their money in digital assets, according to Marlon Cumberbatch, who conducts consumer research on cryptocurrency and other digital assets for the National Research Group.
This is true despite the recent market crashes. “Some people believe this is the beginning of the end” for cryptocurrency, “Some people believe,” When it comes to potential investment opportunities, Cumberbatch stated, “but we believe this is the end of the beginning.”
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This year, there has been an increase in the number of legislative proposals coming out of Congress that, in a variety of different ways, aim to find solutions to the issues that have been plaguing the cryptocurrency industry.
Sen. Pat Toomey, a Republican from Pennsylvania, introduced in April a bill known as the Stablecoin TRUST Act, which would establish a regulatory framework for stablecoins.
Stablecoins have suffered massive losses so far in 2018. A stablecoin is a type of cryptocurrency that is pegged to a specific value. This value is typically based on the value of the United States dollar, another currency, or gold.
Sens. Kirsten Gillibrand (D-New York) and Cynthia Lummis (R-Wyoming) introduced a comprehensive piece of legislation known as the Responsible Financial Innovation Act in June.
This bill would make a distinction between digital assets that are commodities and those that are securities, which is something that has not been done previously. It would also require the Internal Revenue Service to adopt guidance on merchant acceptance of digital assets and charitable contributions.