CFTC-registered crypto exchanges? A new bill proposes a voluntary path for that
New legislation has been proposed that, if passed, would create an opt-in pathway to regulate U.S. cryptocurrency exchanges under a new, national-level framework.
The Digital Commodity Exchange Act (DCEA) endeavors to “regulate the trading venues which list emerging digital commodities, such as Bitcoin, Ether, their forks, and other similar digital assets, for trading.” The wide-ranging legislation — introduced by Representative Michael Conaway — is the first of its kind to emerge from Congress, which to date has largely focused on adding definitions for digital assets to the federal code.
At the center of the bill is a proposed designation for crypto exchanges: a registered Digital Commodity Exchange, or DCE. Under the auspices of the Commodity Futures Trading Commission (CFTC), such a designation would exist alongside classifications for Swap Execution Facilities and Designation Contract Markets. What’s more, the designation would offer an alternative to the state-by-state, money transmitter-centric approach that prevails today. The CFTC has considered cryptocurrencies like bitcoin to be commodities since 2015.
The bill outlines how such exchanges would be required to have safeguard measures in place, shielding customers from potential harm and manipulation on their trading venues. It also includes language about information reporting requirements for DCEs and procedures for a potential wind-down, including how much financial resources a DCE must have on hand at a given time.
On the question of asset custody, the bill also provides for certain firms to be designated “Qualified Digital Commodity Custodians,” for which the CFTC would “set minimum standards for supervision and regulation a regulator would have to impose for an entity regulated under the regime to be deemed ‘qualified.”
In sum, Conaway’s bill attempts to cast a wide net and, if successful, would represent a novel framework and provide the kind of regulatory clarity that many U.S. crypto businesses have long sought.
https://www.theblockcrypto.com/post/78723/cftc-crypto-exchanges-congress-bill
