The US Senate wants to tighten oversight of cryptocurrencies

The Digital Commodity Consumer ProtectionAct, introduced by the Agriculture Committee, contains definitions for a new category of commodities, including the cryptocurrencies BTC and ETH.

The legislation obliges brokers, custodians, dealers, and businesses that trade in digital assets to register with the CFTC (Commodity Futures Trading Commission), otherwise they face penalties.

«These rules ensure that digital commodities platforms are held to the same standards as traditional financial institutions. Without adequate oversight, customers will continue to be vulnerable to fraud and manipulation, and market participants will lack the regulatory certainty they need to innovate and grow,» the Senate committee said in a statement.

In terms of jurisdiction, the CFTC will oversee transactions involving digital goods, except for those that result in the purchase or sale of goods and services.

The bill also aims to prohibit abusive trading practices, require disclosure of conflicts of interest to government agencies, and introduce strong cybersecurity measures. The Senate will require digital commodities platforms to create an environment of trust and transparency in financial markets by publishing information about the commodities they deal with (e.g., trading volumes and volatility).

Peter Van Valkenburg, research director at the Coin Center, an industry think tank, expressed general support for the legislation: «The advantage of the bill would be a simplified system of regulating money transfers. In addition, the SEC would feel less pressure to regulate exchanges that do not trade securities.»

The Coin Center’s statement also notes that it does not seem fair to them to force people who write or publish software to register with the CFTC: «Mandatoryregistration of these activities would not only destroy the innovative nature of technology with onerous requirements,» Valkenburg wrote, «it would also violate the constitutional right to privacy.