After all, who is the guardian of digital currencies in America? Congress will decide

There is a disagreement between the US Securities and Exchange Commission (SEC) and the US Commodity Futures Trading Commission (CFTC) about which of these two bodies should be the custodian and regulator of digital currencies. If this disagreement continues, it is likely that the US Congress will act to decide on this matter.

An employee of the office of US Senator Cynthia Lummis believes that the Congress of this country should enter into the issue of the dispute between the Securities and Exchange Commission and the Futures Trading Commission and determine the regulatory body for digital currencies; Of course, if this issue is not resolved between them.

The root of this dispute goes back to 2014 (1393); That is, when the CFTC first declared its authority to rule on digital currencies. Later, in 2018 (1397), a United States Federal Court ruling confirmed this opinion and declared that the CFTC has the jurisdiction to prosecute criminals in fraud cases related to digital currencies. However, in practice, it has been the SEC that has so far investigated the majority of exchanges related to digital currencies and assets in the United States.

It was on August 3 that Michigan Senator Debbie Stabenow and Arkansas Senator John Boozman introduced the Digital Consumer Protection Act of 2022 (DCCPA). If US lawmakers vote in favor of the bill, the CFTC would have the power to regulate digital goods.

Importantly, under the DCCPA, both Bitcoin and Ethereum will fall under the category of digital goods and not securities. The reason this is important is that Gary Gensler, the head of the SEC, recently said in an interview with the CNBC news channel that Bitcoin is the only digital currency that he accepts as a commodity.

Gensler adds in this regard:

Some digital currencies such as Bitcoin are considered a commodity as officials before me and others have said. I’m talking about Bitcoin for now, not any other token.

However, the employee of Loomis’ office believes that the chance of passing this bill this year is less than 50%.

This member of Senator Loomis’ office says:

This bill may be passed this year only if an unexpected event like the collapse of exchanges in the United States occurs to draw the attention of lawmakers to this issue.

This news was published after the SEC recently started its investigation into the digital currency exchange Coinbase, which is worth 20 billion dollars. However, this member of Senator Loomis’ office believes that the rest of the US-based exchanges will also be investigated.

Under US law, the Howie test determines whether a transaction qualifies as an investment (securities) contract. According to this test, an investment contract falls under the category of securities when monetary investors have invested in a joint venture with the expectation of obtaining a reasonable profit from the efforts of others.

If Ethereum or any other digital asset is found to fall within this definition, US-based cryptocurrency exchanges will be illegally trading securities. The SEC recently introduced 9 digital currencies as securities.