Sen. Stabenow, lawmakers look to forge ahead on legislation that will give the CFTC authority over crypto citing urgency

A bill to regulate crypto and give the U.S. Commodity Futures Trading Commission authority over "digital commodities" is rolling ahead as some lawmakers push for legislation in the coming months.

In a Senate Agriculture Committee hearing titled "Oversight of Digital Commodities," Sen. Debbie Stabenow, D-Mich., who chairs that committee, said she plans to send language to fellow members this week.

"We're working to have specific language to members by the end of the week for your review," Stabenow said on Wednesday. 

"We must have clear common sense rules of the road that allow good actors to innovate and grow," Stabenow added. "Blockchain technology can help us manage data and move money in more efficient and transparent ways, but these goals cannot be realized without comprehensive federal legislation. Our counterparts around the global recognize this and the U.S. must as well. But most importantly, we owe it to the American public to protect them from bad actors exploiting digital assets for personal gain at the expense of their customers." 

Stabenow is looking to advance legislation regulating crypto and giving the CFTC regulatory authority over digital commodities. She met with committee Democrats on Monday night to discuss how to get the bill to a markup, with an aim to make that happen this summer, according to Politico . Politico also reported that ranking member John Boozman, R-Ark., has not yet been won over on the bill. 

On Wednesday, Stabenow shed some light on what might be included in her bill. She said any legislation that would advance out of her committee should require crypto firms to hold sufficient capital reserves and have strict cybersecurity standards. A future bill should also protect retail customers by giving those customers accurate information about their assets. Last, a future bill should give permanent funding to the CFTC to oversee "the digital commodity market," Stabenow added. 

Boozman said he has worked closely with Stabenow on her bill over the last several weeks. He said a future bill would need support from stakeholders and alluded to the possibility that they may not support it.

"I and my staff have had numerous meetings with those who would be covered by the proposed legislation," Boozman said on Wednesday. "The frank and honest feedback we have received from those discussions does not lead me to believe that necessary level of support for this proposal will be successful as it currently exists among stakeholders." 

Urgency

Congress has failed to pass legislation to regulate crypto, leaving the Securities and Exchange Commission and the CFTC to "try to do our job," said crypto-friendly Sen. Cory Booker, D-N.J.

The SEC and CFTC have had differing opinions on what digital assets are commodities or securities. For example, CFTC Chair Rostin Behnam has said ether is a commodity, while SEC Chair Gary Gensler has been less direct. 

Some lawmakers have argued that the CFTC doesn't currently have enough resources. The SEC has 4,500 staff members, according to its website, while the CFTC has only around 700 employees, according to a fiscal year 2024 budget document.

"We've heard again and again that the CFTC and SEC lack resources and tools they need to conduct oversight in this huge market," Booker said. Booker also called for strengthening the CFTC's authorities.

CFTC Chair Rostin Behnam, who testified at the hearing, said that during the last fiscal year, half of the CFTC's enforcement docket was related to crypto. 

"It is a staggering statistic for an agency that oversees trillion dollar markets to have to allocate half of its resources to a market it does not regulate or does not get appropriated funds for. It puts both markets at risk and really exposes the fact that there's so much fraud in the crypto space," Behnam said.

There is an urgency here, Booker said.

"I just ask us to move with some haste because if we do not move and get something done this Congress, more and more people will be taken advantage of, and more and more people will lose their money," Booker said. 

Past efforts 

Stabenow previously led efforts for the Digital Commodity Consumer Protection Act , a bill that would give the CFTC more regulatory powers over the sector. The bill, nicknamed the DCCPA, was backed by former FTX CEO Sam Bankman-Fried and came under scrutiny following the exchange's collapse. He was sentenced to 25 years in prison earlier this year after being found guilty on several criminal counts.

Over the past few years, lawmakers in Washington have worked on crypto market structure bills and legislation to regulate stablecoins. 

On Wednesday, Stabenow referenced FIT21, a crypto market structure bill that was voted on by the full House 279-136 in May, with 71 Democrats voting in support.  

"While our bill takes a somewhat different approach and focuses on filling the regulatory gap that exists for digital commodities, I'm confident that we can come together to pass legislation that brings greater integrity to the crypto markets," Stabenow said. 

Stabenow announced her retirement earlier this year and said she would leave her post at the end of her term in January 2025.