Crypto bill a ‘pivotal step’, but needs clarification on ‘digital commodity’

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Sheila Warren, CEO of the Crypto Council for Innovation, said the Digital Commodities Consumer Protection Act currently being considered by U.S. lawmakers was a “pivotal step” towards achieving regulatory clarity, but recommended changes to determine the role authorities will take on digital assets.

In written testimony for a Wednesday hearing on the bill with the Senate Agriculture Committee, Warren said she generally approved of the proposed legislation “pav[ing] the way for innovation” in the United States, but added it needed to better define a “digital commodity” and security rather than leaving the matter to regulatory agencies or courts. According to the Crypto Council CEO, the Digital Commodities Consumer Protection Act fell short of clarifying what trading activity was allowed based on its language. Warren said that it will permit trading in digital assets “not readily susceptible to manipulation,” making it possible that the Commodity Futures Trading Commission, or CFTC, could have its own interpretation in contrast with that of the Securities and Exchange Commission, or SEC.

“The bill leaves it to the agencies and the Courts to determine whether a digital asset, other than Bitcoin and Ether, is a security or not,” said the Crypto Council CEO. “To date, this approach has not worked well, with significant implications for consumers, and is why the industry has made numerous calls for proactive regulation, rather than regulation by enforcement.”

Speaking to Cointelegraph, Warren said the bill, if passed, would grant the CFTC broad authority over the crypto spot market. She said that additional legislation and regulatory processes would likely be required to clarify the SEC’s role — a sentiment recently echoed by SEC Chair Gary Gensler — adding there was “a very tight window” to pass such laws given the possible change in leadership following the 2022 midterm elections. Warren continued:

“We very strongly feel that any crypto legislation should be bipartisan in nature.”

Warren added in her written statement that the CCI supported provisions within the bill aimed at establishing consumer protection standards such as transparency requirements for financial tools and products in the crypto and blockchain space. The legislation also requires a report on underserved communities involved with digital assets.

As the former head of data, blockchain and digital assets at the World Economic Forum, Warren explored central bank digital currencies and promoted the adoption of blockchain technology, leaving in February to become the Crypto Council for Innovation’s CEO. Formed in April 2021, the CCI’s supporters include Coinbase, Gemini, Fidelity Digital Assets, Paradigm, Ribbit Capital, Andreessen Horowitz and Block. The organization has focused on supporting issues related to using cryptocurrencies and harmonizing related regulations in the United States and Europe.