On Thursday (6 December 2018), US Congressman Darren Soto (Democrat) and lawmaker Ted Budd (Republican) proposed new legislation to “help prevent” manipulation of digital currency prices while also “positioning” the United States to be a key player in the cryptoasset industry.
Two New Pieces Of Legislation For Cryptocurrencies
The announcement’s press release noted that two pieces of legislation: the “Virtual Currency Consumer Protection Act of 2018” and the US “Virtual Currency Market and Regulatory Competitiveness Act of 2018” have been drafted to “protect consumers” from cryptocurrency price manipulation and “to ensure” that the US “remains a global leader in fostering innovation.”
A joint statement from Soto and Budd reads:
“[Blockchain and cryptocurrencies] have a profound potential to be a driver of economic growth. That’s why we must ensure that the United States is at the forefront of protecting consumers and the financial well-being of [cryptocurrency] investors, while also promoting an environment of innovation to maximize the potential of these technological advances. This bill will provide data on how Congress can best mitigate these risks while propelling development that benefits our economy. ”
CFTC Asked To Make Recommendations For New Guidelines
As mentioned in the press release, the two bills call on the US Commodities Futures and Trading Commission (CFTC) and other state and federal regulators to make the appropriate recommendations for improving the current regulatory framework for digital assets.
The stated aim for both bills is to enhance consumer protection and promote business development. Moreover, the announcement notes that action is required due to “concerns raised” in the New York Attorney General’s report in September on cryptoasset exchanges’ “risk of manipulation” (which had been disputed by exchanges at that time) and the Wall Street Journal’s claims that prices are being manipulated by trading bots.
Determining What’s Causing Price Manipulation
The Virtual Currency Consumer Protection Act also calls on the CFTC to closely examine crypto market activity and determine what may be causing digital currency price manipulation. Based on its findings, the CFTC has been directed to “make recommendations for regulatory changes.”
Additionally, the draft bill directs the CFTC to recommend changes to regulations that would improve its “monitoring procedures” in “preventing” cryptocurrency price manipulation.
Directing CFTC To Examine Crypto Regulations In Other Countries
The US Virtual Currency Market and Regulatory Competitiveness Act of 2018 instructs the CFTC to perform a “comparative study” of the regulation of cryptocurrency in other jurisdictions. Based on the findings of this investigation, the federal regulator has been asked to make appropriate recommendations for changes to the current regulatory framework.
The new regulation should “promote competitiveness” in the US digital asset markets and industry by “providing regulatory clarity.” The changes to legislation must also help authorities work more efficiently, as the existing regulatory guidelines for cryptoassets are too “burdensome” and may potentially “inhibit innovation,” the House’s blog post notes.
According to the bill, the CFTC needs to provide regulatory clarity by deciding whether digital currencies should be classified as commodities while also looking into the “costs and benefits” of formulating an alternative “regulatory structure” that may replace the existing “state money” transaction system.
Other Recent Crypto And Blockchain Bills
In October of this year, a bipartisan bill had been introduced to the US House of Representatives that recommended drafting a “consensus-based definition of blockchain.” The bill, which was put forth by lawmakers Doris Matsui and Brett Guthrie, is called the “Blockchain Promotion Act of 2018.”
The main objective of the bill is to study distributed ledger technology (DLT) and develop common terminology and standards which would serve to help the US government in working more effectively with such matters.
Earlier in September, US Representative Tom Emmer had presented three blockchain-related bills which focused on current issues related to DLT development, digital currency miners, and developing a workable taxation system for cryptoassets.
Clarification Regarding Initial Coin Offerings (ICOs)
Also in September of 2018, a group of Representatives had asked Jay Clayton, the Commissioner of the US Securities and Exchange Commission (SEC), to clarify when initial coin offerings (ICOs) may be classified as securities.
The letter, which was prepared by several lawmakers including Budd and Soto, had requested for clarification on how to deal with crypto token sales. The letter’s authors had noted that “current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere.”