Three separate bills in the United States Congress have been introduced to make the Commodity Futures Trading Commission (CFTC) the agency responsible for monitoring the cryptocurrency spot market.
CFTC Will Manage Cryptocurrency Spot Market
As of this point in 2022, three separate pieces of legislation have been proposed by legislators in an effort to make the CFTC the agency responsible for regulating the spot market for digital assets. The competence of the Securities and Exchange Commission (SEC) to manage the spot market in comparison to that of the Commodity Futures Trading Commission (CFTC) has been the subject of much discussion for a considerable amount of time.
According to Kristin Smith, who serves as the executive director of the Blockchain Association, this is something that is beneficial for the digital asset industry. All three pieces of legislation—the Lummis Gillibrand bill, the House bill, and the Digital Commodity Exchange Act—cite the CFTC as the authority in charge of regulating digital asset trading.
The “Digital Commodities Consumer Protection Act of 2022” was implemented in July by four senators. The legislators claim that the bill grants the CFTC exclusive authority over the cryptocurrency spot market. This is done to safeguard the interests of consumers while also preserving the integrity of the market and promoting innovation.
In addition, the “Responsible Financial Innovation Act” was proposed back in June by Senators Cynthia Lummis and Kirsten Gillibrand. The CFTC was given responsibility for the regulatory aspects of the spot market as a result of this provision in the bill. The legislators explained that the CFTC is the appropriate regulatory body to oversee digital assets like Bitcoin and Ethereum because they have characteristics similar to those of commodities.
The “Digital Commodity Exchange Act of 2022” was the other piece of legislation that was proposed in the month of April. Tom Emmer, Glen Thompson, Darren Sotto, and Ro Khanna were the sponsors of this piece of legislation. According to them, the bill promotes innovation and technology growth in the United States. In addition to this, it requires a transparent trading and regulatory framework that places an emphasis on the protection of consumers and accountability.
The Commodity Futures Trading Commission (CFTC) should have the authority to monitor the entire cryptocurrency spot market, as proposed in all of the bills. This concludes the debate as to whether the SEC is more qualified to regulate the spot market.
Growing Role of the CFTC in Cryptocurrency Regulations
There has been steady expansion of the Commodity Futures Trading Commission’s (CFTC) role in monitoring the cryptocurrency industry. As a commodity-focused agency, its duty is to manage the cash associated with digital assets on the commodity market.
As the cryptocurrency market continues to grow, the Commodity Futures Trading Commission (CFTC) is looking to take on additional responsibilities, as stated by the chairman of the commission, Rostin Behnam. The CFTC’s efforts must be increased due to the industry’s volatility and rising commodity prices.
However, the commission’s primary responsibility will initially be to monitor agricultural products; however, its operations will shift over time in response to the changing dynamics of the economic environment. Behnam added that the emergence of digital asset technology presents risks and opportunities worthy of consideration, and that the CFTC’s expertise is indispensable.
In the meantime, a number of cryptocurrency exchanges in the United States are in favor of delegating more authority to the CFTC rather than the SEC. Gary Gensler, chairman of the Securities and Exchange Commission, reiterated that cryptocurrencies are securities due to their use of transactions.
In general, the SEC’s ability to sanction cryptocurrency service providers will decrease as a result of the proposed expansion of the roles that the CFTC will play in the regulation of cryptocurrencies.
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