US Senate Unveils Draft Bill To Expand CFTC Authority In Crypto Regulation

The US Senate Agriculture Committee has unveiled draft legislation that would give the Commodity Futures Trading Commission (CFTC) new powers to oversee the crypto market.

The discussion draft was released on Monday by Senator John Boozman and Senator Cory Booker, and builds on work done by the House over the summer, a statement said.

The draft bill gives the CFTC authority to regulate spot trading of digital commodities that are not classified as securities. It would also empower the agency to register and supervise crypto trading platforms, enforcing rules on custody, transparency, audits, and cybersecurity.

“The CFTC is the right agency to regulate spot digital commodity trading,” said Boozman. ”It is essential to establish clear rules for the emerging crypto market while also protecting consumers.”

Boozman Concerned About CFTC’s Lack Of Resources

But Boozman also expressed concerns around the CFTC’s lack of resources and bipartisan commissioners. Currently, the CFTC has 543 full-time staff, much lower than 4,200 at the Securities and Exchange Commission (SEC). 

CFTC Acting Chair Caroline Pham is currently the sole commissioner at the CFTC, with four other seats vacant. Trump has nominated SEC crypto task force counsel Mike Selig to take over. 

“As Congress works to expand authority for the commission to oversee the trading of digital assets that are commodities, it’s essential that we also ensure it has the tools, personnel and resources necessary to carry out this new mission, along with its current responsibilities,” Boozman said.

Draft Bill Outlines Boundaries For Regulatory Agencies

The draft bill outlines boundaries for the CFTC and SEC in overseeing the crypto market.

Key discussion points in draft bill (Source: US Senate Agriculture Committee)

The draft also defines terms like “blockchain” and how these concepts will apply under the Commodity Exchange Act. It directs the CFTC to engage in joint rulemaking with the SEC to address different aspects of the digital asset industry, ranging from portfolio margining of securities to how agencies will oversee intermediaries. 

The draft bill comes after both the SEC and CFTC have taken steps in recent weeks to implement recommendations made by a White House working group about how to better regulate the digital asset industry. 

“More  Americans are engaging with novel financial markets and payment systems than ever before, and Congress must take steps to strengthen and expand regulatory frameworks to protect consumers from predatory practices, keep our markets safe, and prevent bad actors from exploiting regulatory gaps,” Booker said.

Unresolved Issues Remain

Several sections have yet to be finalized and need further negotiation. Another potential roadblock is calls from Democratic Senators to address President Donald Trump’s conflicts of interest.

In July, Bloomberg estimated that the Trump family has profited some $620 million from its crypto ventures, which includes the decentralized finance (DeFi) platform World Liberty Financial. 

Booker said he was particularly concerned about regulatory arbitrage and ”the ongoing corruption of public officials and whether Congress has created the correct guardrails to prevent those misdeeds.”