If the SEC and the CFTC do not solve their dispute internally, the US Congress would have to intervene. In 2014, when nobody knew Bitcoin yet but the digitization of the economy was starting, the CFTC asserted its jurisdiction over digital currencies.
According to a legislator working with Republican Senator Cynthia Lummis, Congress should intervene in the case of an unsolved jurisdictional dispute. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) disagree over who regulates cryptocurrencies in the United States.
The SEC is investigating Coinbase, which is only the beginning of the problem. According to that anonymous legislator, all US-based exchanges in the United States are under scrutiny. While more than 40 cryptocurrency exchanges operate in the country, Binance is subject to different investigation instances.
Congress will take action if the two agencies do not solve the dispute internally. If that happened, they could support the CFTC, which rejects what it defines as regulation through applying regulatory accounting. Despite a series of actions affirming the ability of the SEC to regulate cryptocurrencies, the CFTC does it by law.
The History behind the Regulation of Cryptocurrencies in the United States
In 2014, nobody knew Bitcoin yet, but the digitization of the economy was developing. That year, the CFTC asserted its jurisdiction over digital currencies before Ethereum, among other cryptocurrencies, emerged.
In 2018, a judgment of the US Federal Court affirmed that the CFTC has jurisdiction over them. The agency would be able to prosecute criminals in cases of fraud related to digital currencies, later called cryptocurrencies.
Although doing it wrong, the SEC has regulated cryptocurrencies and exchanges in the United States. The talks between the SEC and the CFTC have been ineffective, which could trigger the intervention of Congress.
A Bill Classifying BTC and ETH as Commodities Could Change Everything
Senators Debbie Stabenow from Michigan and John Boozman from Arkansas recently introduced the Digital Commodities Consumer Protection Act (DCCPA). If Congress passes that new bill, it could confirm the rights of the CFTC rights to regulate cryptocurrencies. The DCCPA would classify Bitcoin (BTC) and Ether (ETH) as digital commodities, not securities.
A recent statement by the president of the SEC, Gary Gensler, has made that classification as digital commodities relevant. The official said that he and his predecessors only consider those cryptocurrencies similar to Bitcoin to be commodities.
According to the Howey test, it is possible to determine whether a transaction constitutes an investment (security) contract. That means that an investment of money in an enterprise could generate profits derived from the efforts of others.
However, the above anonymous legislator of Senator Lummis thinks it has less than a 50% chance of approval. According to him, the bankruptcy of a leading US cryptocurrency exchange or other similar catastrophic events must occur.
Bitcoin is trading at around USD 22,978 and has accumulated a 2.8% loss over the last week. While its daily trading volume is above USD 13.62 billion, its market capitalization is about USD 439.23 billion, according to CoinGecko.
By Alexander Salazar
