US Senator Cynthia Loomis believes that the US Congress will have to step in and resolve the dispute between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over who regulates cryptocurrency if the issue cannot be resolved internally.
This case stems from 2014 when he was CFTC First assert jurisdiction over virtual currencies. This was later confirmed by a US Federal Court ruling in 2018, which states that the CFTC has jurisdiction to prosecute criminals for fraud cases involving virtual currencies. However, it has been the Securities and Exchange Commission (SEC) that has mostly been investigating US-based cryptocurrency exchanges and their assets so far.
On August 3, Senators Debbie Stabeno (Michigan) and John Bozeman (Arkansas) introduced the Digital Goods Consumer Protection Act of 2022. (DCCPA). If the bill is passed into law by the US legislature, the CFTC will be given the rights to regulate digital goods.
Notably, the DCCPA will classify both Bitcoin (BTC) and Ether (ETH) as digital commodities and not as securities. This is especially important because SEC President Gary Gensler recently said in an interview with US business news channel CNBC that BTC is the only cryptocurrency he feels comfortable categorized as a commodity:
“Some, like Bitcoin – that’s the only thing I’ll say because I’m not going to talk about any of these tokens, but my predecessors and others said it’s a commodity.”
But despite the tension, the Lummis employee believes the DCCPA bill has less than a 50% chance of passing this year:
“The only way for either law to pass this year is if a catastrophic black swan event, such as the crash of a major US stock exchange, can mobilize lawmakers.”
The news comes after the Securities and Exchange Commission started Investigation Coinbase is a $20 billion cryptocurrency exchange, but a Lummis employee also mentioned that every cryptocurrency exchange in the US is under investigation in some form.
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Under US law, the Howey The test determines whether the transaction constitutes an investment contract (a security). The test states that there is an investment contract “when there is an investment of money in a joint enterprise with a reasonable expectation of profits to be gained from the efforts of others.”
If ETH, or any crypto asset for that matter, is found within that definition, then US cryptocurrency exchanges will trade the securities illegally. The SEC recently listed nine crypto assets as securities.