On December 6, 2018, Congressman Darren Soto (D-FL-09) and Ted Budd (R-NC-13), presented legislation fillings designed to avoid the price manipulation of virtual currency and to keep the U.S. leading the cryptocurrency industry.
Safeguarding Consumers and Stimulating Innovation
The pair of Congressmen presented two new pieces of legislation which propose a set of measures to prevent the price of virtual currencies to be manipulated. This move will hopefully propel legislators and the designated commissions to further research the potential risks to cryptocurrency as well as the adoption of preventative techniques.
The fillings titled the “Virtual Currency Consumer Protection Act of 2018” and the “U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018,” will determine the way legislators will move forward with digital currencies as well as ensure the U.S. maintains its position as a global leader in fostering innovation.
Soto and Budd joined to release the following statement:
“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. This bill will provide data on how Congress can best mitigate these risks while propelling development that benefits our economy.”
The two bills will force the U.S. Commodity Futures Trading Commission (CFCT) and other financial regulators to take action and providing recommendations on how to adopt the right measures to prevent price manipulation within the virtual currency space.
The CFCT will also look into how to boost the regulatory framework for both the consumer and business development side. This will have to be done according to the concerns raised in the New York Attorney General’s report on virtual exchanges’ risk of manipulation.
The Virtual Currency Consumer Protection Act also directs the CFTC to describe how price manipulation can happen in virtual markets and how this can be prevented. The exercise will produce new ideas for regulatory changes that can improve the regulatory body’s monitoring procedures in preventing price manipulation.
The U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018 also asks the CFTC to go through a comparative analysis of different regulatory frameworks by analyzing how other countries are dealing with digital currencies. Ideally, the group will then provide advice for the implementation of regulatory changes that could promote competitiveness in the U.S.
The CFCT will be in charge of providing regulatory clarity when it comes to legal aspects in the industry and by studying alternatives for inadequate rules that may turn out to be more of a hindrance to innovation than a safeguard for consumers.
One of the main subjects the CFCT will have to clarify is if virtual currencies qualify as commodities and to determine the pros and cons of new rulings that could level things up and enable a regulatory structure capable of replacing the current system of money transmission.