Soto Introduces Bipartisan Bills to Encourage Consumer Protection and Regulatory Competitive Developments Within the U.S. Virtual Currency Market
WASHINGTON, D.C. – This week, Congressman Darren Soto (D-FL-09) introduced two bipartisan bills, the Virtual Currency Consumer Protection Act of 2021 and the U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2021, to help prevent virtual currency price manipulation and position the United States to be a leader in the cryptocurrency industry.
“Virtual currencies and the underlying blockchain technology have 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,” said Congressman Soto. “These bills will provide data on how Congress can best mitigate these risks while propelling development that benefits our economy.”
The Virtual Currency Consumer Protection Act of 2021 directs the Commodity Futures Trading Commission to describe how price manipulation could happen in virtual markets and make recommendations for regulatory changes to improve the CFTC’s price manipulation prevention procedures.
The U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2021, co-sponsored by Rep. Tom Emmer (R-MN-06), directs the CFTC to conduct a comparative study of the regulation of virtual currency in other countries and make recommendations for regulatory changes to promote competitiveness in the U.S. by providing regulatory clarity and examining alternatives for current burdensome regulations that may inhibit innovation.
Both bills are also co-sponsored by Reps. Ted Budd (R-NC-13), Ro Khanna (D-CA-17), and Warren Davidson (R-OH-08). They direct the CFTC and other financial regulators to make critical recommendations to improve the regulatory environment for both the consumer and business development sides. These pieces of legislation are crucial 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.
These bills have been introduced in the past two Congressional sessions and have had success through the appropriations process. First, funding increases of $3 million to LABCFTC were included in the final FY20 appropriations package, included below, and signed into law. Additionally, report language based on portions of these bills was also included in the final FY20 appropriations package and resulted in a subsequent report by the CFTC. The language directs the commission to prepare a report on how to better protect virtual currency investors and promote American competitiveness in the realm of cryptocurrency. Rep. Bonnie Watson-Coleman (D-NJ-12) was essential in drafting the original consumer protection bill and assisting to get the final language in the final appropriations package.
FY20 Appropriations Language:
Virtual Currency Monitoring — The advent of virtual currency markets has presented several new challenges for the Commission in its efforts to carry out its mission. Each virtual currency derivatives contract currently ties its price in some way, through various settlement processes, to prices of virtual currency on certain cash market platforms. This underlying virtual currency cash market is relatively nascent, and the platforms operating in the cash market remain largely unregulated, with the Commission having only limited enforcement authority over the cash market. Those features of the underlying cash market platforms have led the Commission to note multiple risks to the markets. Therefore, the Committee encourages the Commission’s ongoing efforts, in coordination with other financial regulators such as the Securities and Exchange Commission, to continue monitoring virtual currencies, including Bitcoin futures contracts, and to detect, investigate, and prosecute fraud and manipulation in these markets. The Commission is directed to prepare a report on how to better protect virtual currency investors and promote American competitiveness in this evolving global marketplace. This report should include, but is not limited to, a discussion of how to protect investors against fraud and manipulation involving virtual currency. This report is to be made available on the Commission website within 270 days of the date of enactment of this Act.
Click here for the full text of the Virtual Currency Consumer Protection Act of 2021
Click here for the full text of the U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2021