Senate to Classify Bitcoin as a Digital Commodity CryptoGlobe

  • A new bill classifying bitcoin as a digital commodity could be tabled today.
  • The move would allow the current derivatives and futures markets watchdog, the CFTC, to gain regulatory jurisdiction over bitcoin.
  • The bill seeks to expand previous definitions of the bitcoin ecosystem while excluding securities of digital products.

According to a Wall Street Journal report, leaders of the Senate Agriculture Committee (SAC) are considering introducing a bill that would classify bitcoin as a digital commodity.

The category of digital goods is relatively new. Currently, the Commodity Futures Trading Commission (CFTC) oversees the regulation of commodity derivatives, rather than the underlying commodity itself. This bill seeks to empower the CFTC to regulate spot markets for digital commodities, meaning that the regulator would have the ability to regulate the underlying asset itself.

The bill will also prevent securities from being simultaneously labeled as a digital commodity. Therefore, all cryptocurrencies labeled as a security would fall under the jurisdiction of the Securities and Exchange Commission (SEC) rather than the CFTC.

In fact, the SEC has already made several calls to cryptocurrency exchanges suggesting that they register with the SEC as security exchanges. This action would put the exchanges in the same category as other securities trading platforms like the New York Stock Exchange.

In addition, the bill would seek to regulate and define brokers, dealers, custodians and trading facilities. Although semantic, these designations go a long way towards reducing previous attempts to regulate the ecosystem, which resulted in misleading definitions that could have made it extremely difficult to function in space as a transaction validator or service provider – as shown by the infrastructure bill presented earlier.

However, this bill would include an exclusion for “a person” if said person’s involvement in the ecosystem is “solely because that person validates transactions of digital goods”. While this can be a boon for those not directly involved in bitcoin trading, there is still room for these definitions to get dicey.

In addition, SAC Democratic Chair Debbie Stabenow and Arkansas Republican Principal John Boozman plan to introduce the bill today. CFTC Chairman Rostin Behnam, a former Stabenow staffer, said the regulator is “ready and well positioned” to oversee spot markets related to digital products.