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The Digital Commodity Exchange Act of 2022(DCEA),
introduced by Republican representatives Glenn Thompson of
Pennsylvania and Tom Emmer of Minnesota, along with Democratic
representatives Darren Soto of Florida and Ro Khanna of California,
would create a definition for “digital commodity” and
allow the Commodity Futures Trading Commission (CFTC) to oversee
companies issuing or letting people trade certain tokens, while
having the Securities and Exchange Commission (SEC) continue to
oversee tokens that fall under U.S. securities laws.
It is critical that market participants and blockchain
entrepreneurs consider the effects of emerging regulation and the
possible benefit of implementing an affirmative compliance program
to best avail themselves of existing and developing
As Washington policymakers wrangle over how to oversee digital
assets, including cryptocurrencies, the DCEA would assign oversight
responsibilities to a regulator that has been to date seen as more
receptive to the needs of blockchain industry concerns than the
The DCEA would create an elective registration option for crypto
exchanges to register with the CFTC. To encourage registration,
platforms that elect to register will be able to offer leveraged
trading and digital commodities that were distributed to
individuals before being available to the public.
At the heart of the matter is how federal regulators classify
digital assets. Gensler and a number of Democratic lawmakers
skeptical of blockchain technology maintain that most crypto coins
are effectively securities, so their issuers need to register with
the SEC and offer regular public disclosures to inform investors.
Alternatively, crypto industry leaders and the sponsors of the DCEA
assert that most coins are better categorized as commodities.
“Where you have cases where these cryptocurrencies look
more like gold or dollars or currencies than securities, then they
should be treated the same way,” Representative Khanna
said. “And that’s all this bill is saying: When you
have highly diffuse control over an asset, then it should be
regulated by the CFTC.”
The Biden administration last monthordereda sweeping review of the
government’s approach to crypto, mandating reports on
everything from its implications for financial stability to its
national security risks. The DCEA underscores the degree to which
policymakers are starting from scratch in trying to determine how
to fit emerging technologies into regulatory structures dating back
nearly a century.
Dinsmore attorneys are monitoring these developments and are
prepared to help.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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