In a rare example of bipartisan cooperation two US congressmen, Democrat Darren Soto and Republican Ted Budd, have introduced two pieces of legislation aimed at helping prevent virtual currency price manipulation and position the US as a leader in the global cryptocurrency industry.
The Virtual Currency Consumer Protection Act of 2018 and the US Virtual Currency Market and Regulatory Competitiveness Act of 2018, will direct the US Commodity Futures Trading Commission (CFTC) to analyse and report on measures to protect consumers from price manipulation and to ensure America remains a global leader in fostering innovation in this evolving global marketplace.
In a joint statement, released on December 6, the two congressmen described the motivations and intentions underlying the legislation:
“Virtual currencies and the underlying blockchain technology has a profound potential to be a driver of economic growth. That’s why we must ensure that the United States is at the forefront of protecting consumers and the financial well-being of virtual currency investors, while also promoting an environment of innovation to maximize the potential of these technological advances. This bill will provide data on how Congress can best mitigate these risks while propelling development that benefits our economy,” read the statement.
The two bills direct the CFTC and other financial regulators to make critical recommendations for how to improve the regulatory environment for both the consumer and business development side, “especially in light of concerns raised in the New York Attorney General’s recent report on virtual exchanges’ risk of manipulation and the Wall Street Journal’s description of potentially abusive software of bots manipulating the price of Bitcoin”.
The Virtual Currency Consumer Protection Act directs the CFTC to describe aspects of how price manipulation could happen in virtual markets and then to make recommendations for regulatory changes that can improve the CFTC’s monitoring procedures in preventing price manipulation.
The US Virtual Currency Market and Regulatory Competitiveness Act of 2018 directs the CFTC to conduct a comparative study of the regulation of virtual currency in other countries and then make recommendations for regulatory changes to promote competitiveness in the US in the industry by providing regulatory clarity and examining alternatives for current burdensome regulations that may inhibit innovation.
For example, it asks the CFTC to clarify the virtual currencies that qualify as commodities and examine the costs and benefits of a new, optional regulatory structure that could replace the current state money transmission system.