A bipartisan group of U.S. senators introduced legislation that would supply the Commodity Futures Trading Commission with new tools and authorities to regulate digital commodities. This mandatory framework will safeguard customers and our markets.
The Digital Commodities Consumer Protection Act of 2022 seeks to safeguard markets in several ways. It closes regulatory gaps by requiring all digital commodity platforms—including trading facilities, brokers, dealers, and custodians—to register with the CFTC. Further, digital commodity platforms must prohibit abusive trading practices, eliminate or disclose conflicts of interest, maintain sufficient financial resources, have strong cybersecurity programs, protect customer assets, and report suspicious transactions.
In addition, it mandates that digital commodity platforms adhere to advertising standards and disclose information about digital commodities and their risks, bringing greater transparency and accountability to the marketplace. Further, it authorizes the CFTC to impose user fees on digital commodity platforms to fully fund its oversight of the digital commodity market. It also directs the CFTC to examine racial, ethnic, and gender demographics of customers participating in digital commodity markets and use that information to inform its rulemaking and provide outreach to customers.
“One in five Americans have used or traded digital assets—but these markets lack the transparency and accountability that they expect from our financial system. Too often, this puts Americans’ hard-earned money at risk,” said U.S. Sen. Debbie Stabenow (D-MI), chair of the Senate Committee on Agriculture, Nutrition, and Forestry. “That’s why we are closing regulatory gaps and requiring that these markets operate under straightforward rules that protect customers and keep our financial system safe.”
Stabenow is one of the bill’s sponsors, along with John Boozman (R-AR), ranking member of the Senate Committee on Agriculture, Nutrition, and Forestry.
“Digital assets and blockchain technology have already and will continue to change the way global markets function. Yet, this fast-growing industry is currently governed largely by a patchwork of regulations at the state level. That simply is not an effective way to protect consumers from fraud. Furthermore, relying solely on state regulation does not ensure that rules and regulations work for all stakeholders. Our bill will empower the CFTC with exclusive jurisdiction over the digital commodities spot market, which will lead to more safeguards for consumers, market integrity, and innovation in the digital commodities space,” Boozman said.
U.S. Sens. Cory Booker (D-NJ) and John Thune (R-SD) are also sponsors of the bill.
“As the number of Americans engaging with digital assets continues to grow, it is critical that we clarify and strengthen the regulation of our financial system,” Booker said. “This bipartisan legislation will enhance oversight over digital commodities, taking an important first step to ensure that the digital marketplace operates fairly with commonsense rules in place and protects consumers entering this market.”