#IPOWave Senate Agriculture leaders want CFTC to regulate crypto spot trading
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.
Summary
Senate Agriculture Committee has introduced a bipartisan bill to expand the CFTC’s authority over crypto trading in spot markets.
The draft proposes registration requirements alongside other investor protection mandates.
Self-custody protections and developer exemptions have been included in the proposal.
On Monday, the committee chairman, John Boozman, and Senator Cory Booker unveiled the proposal, which builds upon the CLARITY Act that cleared the House earlier this year.
Key proposals in the draft bill include a formal registration process for crypto trading platforms and new consumer protection rules.
The bill describes digital commodities as any “fungible 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.”
Crypto trading under the CFTC’s watch
Under the proposed framework, digital commodity exchanges would be required to maintain “customer fund segregation requirements,” implement “conflict of interest safeguards,” and establish appropriate “customer disclosure requirements” along with “dispute resolution processes” to better protect retail participants, the committee explained in a separate statement.
Brokers and dealers operating in the spot market would be required to register separately as “digital commodity brokers” or “digital commodity dealers,” depending on their activities, and comply with requirements to use “qualified digital commodity custodians” when holding customer assets.
The draft includes bracketed options for exemptions, with provisions still under discussion regarding limited exemptions for “eligible contract participant activities” and rules the CFTC may issue.