Senate Proposes Bill to Regulate Spot Markets for Cryptocurrencies

Certain investors rebuke the addition of cryptocurrencies in their portfolios, dismissing digital assets as too great of a risk, especially without regulatory oversight. That could be changing with the introduction of a pair of bills by the U.S. Senate.

According to a Wall Street Journal report, Senate leaders “are set to propose legislation that would assign oversight of the two largest cryptocurrencies, bitcoin and ether, to the federal agency that regulates milk futures and interest-rate swaps.”

“Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) and top-ranking Republican John Boozman of Arkansas, are planning to introduce a bill Wednesday (August 3) that would empower the Commodity Futures Trading Commission to regulate spot markets for digital commodities, a newly created asset class,” the report added. “Currently the CFTC has authority to police derivatives, such as futures and swaps, rather than underlying commodities.”

It’s certainly a step forward into instilling more confidence into investors who are still on the fence when it comes to adding cryptocurrencies into the investment mix. At the current level of oversight, crypto markets might seem like the Wild West to conservative investors, but that stigma may change with more regulation.

CFTC Is the Preferred Regulator of Lobbyists

If the crypto market is to undergo a maturation process, regulatory oversight is almost necessary, but lobbyists do have their preferences. According to a Washington Post article, the CFTC is the preferred regulator of choice versus the Securities Exchange Commission (SEC).

“Crypto interests for months have been lobbying lawmakers to empower the CFTC as their top regulator,” the Washington Post reported. “They say the regulator would give them friendlier treatment than the SEC, where Chair Gary Gensler has taken an aggressive public line toward the industry.”

“CFTC Chairman Rostin Behnam likewise is advocating a bigger role for his agency,” the report added. “In a speech at the Brookings Institution last month, he said federal and state regulators sharing responsibility in a ‘patchwork blanket’ approach ‘is increasingly proving inadequate’ as the crypto market rapidly evolves.”

With regard to regulatory oversight, there are options for investors who do want to get cryptocurrency exposure, but with the veil of legitimacy that a traditional financial market exchange provides. These exchanges contain heavy regulatory oversight compared to cryptocurrency exchanges that are still in their nascent stages of development — structurally and regulatorily.

One way to get exposure, particularly to the leading cryptocurrency bitcoin, is to opt for an exchange traded fund (ETF) that exposes investors to bitcoin futures. This is available in the ProShares Bitcoin ETF (BITO), which relies on an active management strategy that adds an extra layer of volatility protection by putting the investments in the hands of market professionals.

For more news, information, and strategy, visit the Crypto Channel.