<\/p>\n
With support from both sides of the aisle, Senate agriculture leaders have introduced a bill to put crypto spot markets under the oversight of the Commodity Futures Trading Commission.<\/p>\n
<\/p>\n
On Monday, the committee chairman, John Boozman, and Senator Cory Booker unveiled the proposal<\/a>, which builds upon the CLARITY Act that cleared the House earlier this year.<\/p>\n Key proposals in the draft bill include a formal registration process for crypto trading platforms and new consumer protection rules.<\/p>\n The bill describes digital commodities as any \u201cfungible digital asset that can be exclusively possessed and transferred, person to person, without necessary reliance on an intermediary, and is recorded on a cryptographically secured public distributed ledger.\u201d<\/p>\n Under the proposed framework, digital commodity exchanges would be required to maintain \u201ccustomer fund segregation requirements,\u201d implement \u201cconflict of interest safeguards,\u201d and establish appropriate \u201ccustomer disclosure requirements\u201d along with \u201cdispute resolution processes\u201d to better protect retail participants, the committee explained in a separate statement<\/a>.<\/p>\n Brokers and dealers operating in the spot market would be required to register separately as \u201cdigital commodity brokers\u201d or \u201cdigital commodity dealers,\u201d depending on their activities, and comply with requirements to use \u201cqualified digital commodity custodians\u201d when holding customer assets.\u00a0<\/p>\n The draft includes bracketed options for exemptions, with provisions still under discussion regarding limited exemptions for \u201celigible contract participant activities\u201d and rules the CFTC may issue to \u201ceffectuate the protection of customer assets.\u201d<\/p>\n <\/p>\n Lastly, the draft also calls for interagency cooperation between the CFTC and the Securities and Exchange Commission.<\/p>\n According to Boozman, the CFTC \u201cis the right agency to regulate spot digital commodity trading, and it is essential to establish clear rules for the emerging crypto market while also protecting consumers.\u201d<\/p>\n \u201cThis bipartisan discussion draft would provide the CFTC with new authority to regulate the digital commodity spot market, create new protections for retail customers, and ensure the agency has the personnel and resources necessary to oversee this growing market,\u201d he added.<\/p>\n However, the draft is yet to resolve key questions around DeFi oversight, anti-money laundering obligations, the scope of CFTC discretion, and how to strike a balance with industry safe harbors, with several sections still bracketed and marked as \u201cseeking further feedback.\u201d<\/p>\n Boozman has acknowledged this and said the draft was a \u201cfirst step,\u201d noting that more work is needed before the legislation can advance out of committee and reach the Senate floor.<\/p>\n Crypto proponents have largely supported the draft, especially as it protects self-custody rights and allows individuals to \u201cengage in direct, peer-to-peer, lawful transactions\u201d without relying on intermediaries. See below.<\/p>\nCrypto trading under the CFTC\u2019s watch\u00a0<\/h1>\n
Crypto industry reacts positively<\/h2>\n