How Much Federal Regulation Should There Be Of The Crypto-Currency Industry?

As Wyoming continues to position itself as the hub for the cryptocurrency industry, a fight is brewing in Washington, D.C., over a bill that could establish federal oversight for bitcoin and other crypto markets.

Renée Jean

October 23, 20223 min read

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(Cowboy State Daily Staff)

By Renée Jean, Business and Tourism Reporter

As Wyoming continues to position itself as a potential hub for the cryptocurrency industry, a fight is brewing in Washington, D.C., over a bill in the U.S. Senate Agriculture Committee that seeks to establish federal oversight for bitcoin and other crypto markets.

Stirring the pot is a proposed amendment that would give the Securities Exchange Commission the first say on whether a digital token is a commodity and the Commodity Futures Trading Commission a leading role in regulating it.

That would give the agency de facto control over what comes under SEC rules and plays along with recent comments by SEC Chair Gary Genslar that his agency should regulate most digital tokens.

Too Onerous

The amendment has riled crypto advocates who hope to avoid SEC control, believing it will be too expensive too onerous. 

Meanwhile, crypto attorney Gabriel Shapiro has released some of the bill’s draft language pertaining to decentralized finance (DeFi) and ruffled a few feathers there. That sector has often felt the needs of crypto are being prioritized over theirs — even though some of what’s proposed could make it easier for DeFi to escape registration.

The bill being negotiated now was introduced by Senate Agriculture Committee Chair Sen. Debbie Stabenow, D-Michigan, and ranking member Sen. John Boozman, R-Arkansas, but it incorporates several portions of a bill introduced by Wyoming Sen. Cynthia Lummis and Sen. Kirsten Gillibrand  of New York. 

Both bills seek to give the Commodity Futures Trading Commission oversight of crypto and regulate digital coins as commodities rather than securities, which would fall directly under SEC control.

Lummis: Time For Regulation

Crypto has grown into a $1.2 trillion industry since being created more than a decade ago. Many lawmakers, including Lummis, who has been a national advocate for it, believe the time has come for some regulation to tame the “Wild West” criticism of the sector. 

Lummis has been vocal in supporting the Stabenow-Boozman bill and suggested there could be final legislation ready within a few months. 

The devil, though, is in the legislative details negotiated down the line. 

Wait And See

In an email to Cowboy State Daily, Lummis indicated she is taking a wait-and-see approach to see what’s in the final bill.

“There is an appetite for legislation to bring digital assets into our broader financial system,” Lummis says in the email. “Digital assets are not going anywhere, and we need to make sure that innovators have room to continue to develop technologies that will take us into the future while prioritizing consumer safety.”

Lummis added she will carefully review the final language of the bill and consider whether it fits Wyoming interests.

“I have some hesitations about how the Stabenow-Boozman bill would impact Wyoming digital asset laws, but I look forward to continuing our conversations about how we can work together on this legislation,” she said.

Wyoming is one of the only states in the nation with a complete legal framework for digital assets and is considered one of the friendliest to the crypto sector. As a result, it attracted the nation’s second largest crypto exchange, Kraken. It and other upstart crypto banks, however, have struggled to gain acceptance by the Federal Reserve’s central bank.

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Renée Jean

Business and Tourism Reporter