US Bill Proposes CFTC to Regulate Crypto Exchanges

A new United States draft bill has proposed a single framework to oversee the cryptocurrency exchanges in the country, making the Commodity Futures Trading Commission (CFTC) their regulator.

Dubbed the Digital Commodity Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Act of 2020, the bill was introduced on Thursday by Representative, Michael Conaway (R-Texas), a ranking member of the House Committee on Agriculture.

The proposed legislation is unique in the United States as it categorized all digital currency exchanges operating in the country separately as ‘digital commodity exchanges’. Earlier bills stressed on properly defining digital currencies.

The CFTC looks at Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term and Etherueum as commodities and already regulate the derivatives market of these digital assets. The new bill creates a separate category for these decade-old assets under the Commodities Exchange Act, but their definition would be similar to commodities.

Circumventing State Permissions

Currently, the crypto exchanges willing to operate in the United States have to seek state money transmission licenses. If the new bill is passed, they can legally offer their services by obtaining a single nation-wide license.

However, the proposals of the bill are not binding on any of the exchanges, hence, they can choose to approach individual states for licenses. It is to be noted that the exchanges need to obtain the existing permissions from the CFTC if they want to list the derivatives.

Meanwhile, the bill specified that the exchanges would only be allowed to list digital assets that are not susceptible to manipulation. But, they can still hold certain types of initial coin offerings (ICOs).

“The proposed legislation builds on the existing commodity market practices required of Futures Commission Merchants (FCMs) to protect customer assets,” a summary of the bill stated. “DCEs would be required to segregate customer assets and hold them in separately regulated entities which are licensed to custody digital assets.”