New Major Bill Ready for Bitcoin and Cryptocurrencies in the US – Significant Changes on the Way
The US Senate Agriculture Committee has proposed a new bill to regulate the cryptocurrency asset market, designating Bitcoin and Ethereum as 'digital commodities' under the Commodity Futures Trading Commission's (CFTC) oversight. The bill aims to establish federal regulation for cryptocurrency trading, obligating crypto companies to separate their operations and hold customer assets only with qualified custodians. Registered exchanges can only list non-manipulable assets, potentially sidelining memecoins and scams. The draft does not address decentralized finance (DeFi) but leaves stablecoins to be regulated under a separate act. Analysts foresee a two-tiered market structure emerging as a result of this legislation.
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Introduction to the New Crypto Regulation Bill
The US Senate Agriculture Committee has drafted a new bill aimed at regulating the cryptocurrency asset market. The bill is an early-stage proposal that defines the Commodity Futures Trading Commission's (CFTC) authority over digital commodities. To become law, it must first pass committee review, then be reconciled with the Senate Banking Committee, and finally be voted on in both the Senate and the House of Representatives.
Classification of Digital Commodities
The draft bill officially designates Bitcoin (BTC) and Ethereum (ETH) as “digital commodities.” These assets will now fall under the CFTC's jurisdiction and will no longer be considered securities. Analysts predict this development could lead to a two-tiered market structure: regulated tokens will attract institutional fund flows, while other cryptocurrencies remain at the margins.
CFTC's Expanded Role and Regulatory Framework
The new draft positions the CFTC as the regulatory authority over both spot and derivatives markets. This regulation would place spot cryptocurrency trading under a federal framework, similar to the existing futures market. The absence of the SEC in this draft is viewed by some commentators as a response to the agency's “overly interventionist” stance during previous periods.
Operational Separation and Protection Measures
The bill would require crypto companies to separate their exchange, brokerage, custodian, and trading desk operations. This aims to end the “all-in-one” model like FTX. Additionally, customer assets would need to be held only in qualified custodians regulated at federal or state levels. Registered exchanges would only be able to list digital assets that are “not susceptible to manipulation.” This provision is expected to make it harder to list memecoins and reduce scams, such as “rug pulls.”
Higher Standards for Brokerage Firms
Brokerage firms will need to comply with CFTC registration, independent auditing, and anti-money laundering and terrorist financing requirements. Experts argue that many tokens listed on major exchanges, such as Coinbase, may fail to meet these stricter standards.
Exclusions and Future Considerations
The new regulation intentionally leaves the issue of decentralized finance (DeFi) to be addressed in future legislation. However, stablecoins will be regulated separately under the “GENIUS Act.” Importantly, no changes have been made to tax regulations, meaning digital commodities will continue to be taxed as “property” by the IRS.
Disclaimer
This is not investment advice.