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US Senate introduces bill to put CFTC in charge of regulating Bitcoin, Ethereum

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US Senate introduces bill to put CFTC in charge of regulating Bitcoin, Ethereum

US Senate introduces bill to put CFTC in charge of regulating Bitcoin, Ethereum Monica Noronha · 10 hours ago · 2 min read

The bill would give the CFTC “exclusive jurisdiction” over all cryptocurrencies that fall under the definition of “digital commodities.”

2 min read

Updated: August 3, 2022 at 5:01 pm

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Cover art/illustration via CryptoSlate

Leaders of the Senate Agriculture Committee introduced a bill on Aug. 3 to make the Commodity Futures Trading Commission (CFTC) the chief regulator of digital assets that are commodities.

The CFTC currently regulates the derivatives market such as futures and swaps but not underlying commodities.

According to the bill, the CFTC would get “exclusive jurisdiction” over cryptocurrencies that qualify as commodities. The bill proposes to amend the definition of ‘commodity’ in the Commodity Exchange Act to include “digital commodity,” which includes the two largest cryptocurrencies — Bitcoin (BTC) and Ethereum (ETH) — and any other tokens not deemed to be securities.

The CFTC would oversee all digital commodities trades except those where digital assets are used solely for the purpose of buying or selling goods or services, according to the legislation.

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The nitty-gritty of the bill

The Digital Commodities Consumer Protection Act of 2022 would make it mandatory for all crypto firms dealing in digital commodities to register with the CFTC. The bill proposes that brokers, custodians, and trading platforms be registered under separate categories, although mining companies would not be required to register.

The bill will also impose an obligation on crypto trading firms to disclose certain information about the digital commodity contracts listed on their platform. This would include the operating structure and system of the commodity, trading volume, and volatility, according to the bill.

The legislation will empower the CFTC to set rules governing margined, leveraged, or financed digital commodity trades along with ensuring fraud prevention. The Commission will also be entrusted with developing rules for consumer protection, like requiring trading firms to disclose conflicts of interest, clearly stating material risks, and setting standards for the marketing of such platforms.

With increasing concern around the energy consumption of digital assets, the CFTC would be required to keep an updated report of how much energy is used in the creation and transfer of the assets, as well as the sources of energy. The Commission would be required to publish the energy consumption report on its website, according to the bill.

While the Securities and Exchange Commission (SEC) has been vying for the role of top regulator of cryptocurrencies, the new bill will allow crypto platforms registered with the CFTC to also register with the securities regulator.

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A wish come true for CFTC, even if partially

The Senate Agriculture Committee, which introduced the bill, had asked the CFTC to provide more guidance on digital assets in January.

In a hearing before the same Committee in February, CFTC chairman Rostin Behnam asked lawmakers to introduce laws that would grant the Commission the authority to regulate cash markets for certain cryptocurrencies. While the current bill does not go so far, it is a step in the same direction.

Coin Center, an industry think tank, supported the bill in a blog post but warned that:

“There is a serious risk of overreach and unintended consequences when registration is mandatory rather than optional.”

Coin Center also cautioned that the current definition of “dealer” in the bill is too broad and requires clearer language to ensure that “ordinary buyers and sellers of cryptocurrency are also not swept into a registration regime.”

It is worth noting that the crypto industry has been hankering for clear definitions of digital commodities and digital securities. This would provide clarity to crypto platforms on which agencies — the CFTC or SEC — they need to register with. However, while the new bill defines ‘digital commodities,’ the industry still has to wait for a definition to figure out which digital assets are securities.

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anonymous sources

Report: Digital Currency Exchange Kraken Under Investigation For Violating OFAC Sanctions

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Report: Digital Currency Exchange Kraken Under Investigation For Violating OFAC Sanctions

On Tuesday, a newly published report details that the cryptocurrency exchange Kraken is under federal investigation for allegedly violating U.S. sanctions, according to five people familiar with the matter. The unknown sources explained that the inquiry into Kraken started in 2019, and it’s accused of allowing users from sanctioned countries like Iran access to the digital currency trading platform.

Treasury’s Office of Foreign Assets Control Is Allegedly Investigating Kraken

The San Francisco-based crypto exchange Kraken is allegedly under investigation by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC), according to a report published by the New York Times (NYT) on July 26, 2022. Kraken founded in July 2011 by Jesse Powell is one of the oldest digital currency exchanges in the world.

The NYT report cites “five people affiliated with the company or with knowledge of the inquiry.” Furthermore, the report also says the anonymous sources did not want to be named “for fear of retribution from the company.” According to the editorial’s summary, OFAC has been investigating Kraken since 2019 for allowing users from sanctioned countries to acquire crypto assets.

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The five people familiar with the matter concerning Kraken say that they expect the U.S. government to impose a fine against the San Francisco trading platform. Kraken got hit with a fine last year when U.S. ​​Commodity Futures Trading Commission (CFTC) charged the firm for “illegally offering margined retail commodity transactions in digital assets.”

At that time, the CFTC levied $1.25 million from the San Francisco crypto company’s parent firm Payward Ventures Inc., and told Kraken to “cease and desist from further violations.” The NYT reached out to Kraken and the company’s chief legal officer, Marco Santori, noted that the exchange “does not comment on specific discussions with regulators.” Santori further said:

Kraken closely monitors compliance with sanctions laws and, as a general matter, reports to regulators even potential issues.

Speaking with a U.S. Treasury spokeswoman, the NYT reporters said OFAC gave a similar statement. “[The U.S. Treasury] does not confirm or comment on potential or ongoing investigations,” the individual from the Treasury said. The people familiar with the matter said the OFAC inquiry started in 2019 when a former employee initiated legal proceedings against Kraken and later settled the case.

NYT’s anonymous sources note that OFAC started looking into Kraken accounts around that same time and the accounts allegedly stemmed from Iran, Syria, and Cuba. The accusations that claim Kraken is under federal inquiry follow the recent report from Bloomberg that says the U.S. Securities and Exchange Commission (SEC) is reportedly probing Coinbase over alleged unregistered securities violations.

Bloomberg’s report concerning Coinbase is similar to the New York Times editorial on Kraken as it cites unnamed people familiar with the matter. Both news publications have cited people familiar with the matter on various occasions in recent times, and more specifically, stories concerning the bankrupt crypto lender Celsius.

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anonymous sources, CFTC, CFTC Fine, Coinbase, crypto exchange, cuba, Digital Currency, Investigation, Iran, Jesse Powell, Kraken, Kraken Sanctions, marco santori, NYT Report, OFAC, OFAC Sanctions, Regulations, report, San Francisco Exchange, Sanctions, SEC, sources, syria, Treasury, US Treasury

What do you think about the report concerning Kraken that says the exchange is allegedly under federal investigation? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,700 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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SEC Chair Gensler Proposes ‘One Rule Book’ Crypto Regulation

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SEC Chair Gensler Proposes ‘One Rule Book’ Crypto Regulation

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has reportedly proposed “one rule book” for the regulation of crypto assets. “If this industry is going to take any path forward, it will build some better trust in these markets,” said Gensler.

SEC Chairman Calls for One Rule Book for Crypto

SEC Chairman Gary Gensler has proposed “one rule book” for the regulation of crypto, the Financial Times reported Friday. He is looking to strike agreements with other financial regulators, including the Commodity Futures Trading Commission (CFTC), to avoid gaps in the oversight of the crypto sector. He told the publication:

I’m talking about one rule book on the exchange.

The SEC chief elaborated that the rule should protect investors against fraud, front-running, and manipulation, in addition to providing transparency over order books.

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The rule book will apply to “all trading regardless of the pair — [be it] a security token versus security token, security token versus commodity token, commodity token versus commodity token,” Gensler described.

The SEC boss revealed that he is working on a “memorandum of understanding” with his counterparts at the CFTC, which would be a formal deal to ensure that trading in digital assets has adequate safeguards and transparency. He explained that if a commodity token is listed on a platform overseen by the securities regulator, the SEC would “send that information over to the CFTC.”

Gensler opined:

By getting that market integrity envelope, one rule book on an exchange will really help the public. If this industry is going to take any path forward, it will build some better trust in these markets.

U.S. Senators Kirsten Gillibrand and Cynthia Lummis recently proposed a framework that would extend the CFTC’s oversight of the crypto sector.

Last week, Gensler warned of “too good to be true” crypto products. He also recently warned that crypto exchanges often trade against their customers. Following the collapse of cryptocurrency terra (LUNA) and stablecoin terrausd (UST), the SEC chairman cautioned investors that a lot of tokens will fail.

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Gensler has been criticized for taking an enforcement-centric approach to regulating crypto assets. SEC Commissioner Hester Peirce said in May that the securities watchdog has dropped the ball on crypto regulation and there are long-term consequences.

What do you think about the comments by SEC Chairman Gary Gensler? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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CFTC may become main regulator for crypto industry

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CFTC may become main regulator for crypto industry

CFTC may become main regulator for crypto industry Oluwapelumi Adejumo · 12 hours ago · 2 min read

U.S.› Regulation

Several crypto exchanges have revealed their preference for CFTC to be the major regulator of the crypto space with FTX Bankman-Fried lobbying the US congress for the commission.

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2 min read

Updated: June 9, 2022 at 3:31 pm

Cover art/illustration via CryptoSlate

👋 Want to work with us? CryptoSlate is hiring for a handful of positions!
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The Commodity Futures Trading Commission (CFTC) is garnering support to be the primary regulator for the crypto industry amongst stakeholders in the crypto industry and US lawmakers, Commissioner Summer Mersinger said during the Reuters Commodities Trading USA conference in Houston.

The CFTC commissioner continued that the commission is also reviewing its potential roles in the crypto industry, especially in areas such as spot-market crypto trading. However, the reviews are still at the preliminary stage.

In his words,

We are still a strong regulator, but our registrants have a lot of flexibility. They have been very interested in that approach versus the top-down way of some other financial regulators.

Several crypto exchanges have revealed their preference for the CFTC to be the principal regulator of the crypto space. The CEO and founder of FTX, Sam Bankman-Fried, has been lobbying the US Congress to give the CFTC a bigger role in overseeing the industry.

Meanwhile, a newly proposed bipartisan bill by Senators Kirsten Gillibrand and Cynthia Lummis wants to regard cryptocurrencies as commodities that should be placed under the purview of the CFTC.

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Who should regulate the crypto industry? SEC or CFTC?

With the newly proposed bill pushing CFTC to the forefront of crypto regulations, experts in the industry have been divided over who should regulate the industry, with some arguing in favor of the Securities and Exchange Commission (SEC) while others push for CFTC.

The common perception is that the SEC has the most potential to oversee the crypto space because it has been at the forefront of regulating it.

Gives CFTC, which is very pro crypto, control over regulating all crypto deemed to be commodities (BTC, ETH, and likely half of all coins). This is good and big. The SEC has hurt crypto in the USA. BUT, It also means many coins will be securities regulated by the SEC.

— Lark Davis (@TheCryptoLark) June 8, 2022

According to Lark Davis, if CFTC becomes the official regulator for the crypto industry, this is “good and big” as “The SEC has hurt crypto in the USA.”

Katherine Kirkpatrick, the General Counsel for Maple Finance, says CFTC taking over the regulation of the industry is good and bad.

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1/ After carefully reviewing the L-G bill, a few thoughts on its application to #DeFI. 1) CFTC auth. is good & bad – good to cede authority to less aggressive SEC, bad bc CFTC is under-funded and under-resourced, so query how the CFTC is going to keep up with rapid development.

— Katherine Kirkpatrick (@kkirkbos) June 8, 2022

Per her statement, it is bad because the CFTC is under-funded and under-resourced, so she wonders how the commission will remain atop the rapid development in crypto and DeFi.

On the other hand, Mark Hays, a senior policy analyst at Americans for Financial Reform, says the SEC should be responsible for overseeing the industry because

Most of the cryptocurrency activity out there walks, talks and acts like a security.

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