Two new bills were introduced in the U.S. House of Representatives at the end of January aimed at recommending possible legislative changes to regulate and promote virtual currencies, also known as cryptocurrencies. The first bill, H.R. 922, Virtual Currency Consumer Protection Act of 2019 aims to promote fair and transparent virtual currency markets by examining the potential for price manipulation. The second bill, H.R. 923, the U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2019, aims to promote United States competitiveness in the evolving global virtual currency marketplace. Similar bills were introduced in the lame duck session of the previous Congress.
H.R. 922, directs the U.S. Commodity Futures Trading Commission (the “CFTC”), in consultation with the heads of the Securities and Exchange Commission and other relevant federal agencies, to prepare a report recommending, among other things, legislative changes needed to improve the ability of the CFTC and other relevant federal agencies to carry out monitoring and enforcement activities, prevent price manipulations of virtual currencies and protect virtual currency investors from price manipulation. The federal agencies would have one year from the date the bill is passed to issue the report.
The second bill, H.R. 923, also directs the CFTC to produce a report with recommendations for legislative changes, but instead of focusing on consumer protection, the report will focus on ways to promote American competitiveness. Part of this exercise would entail a comparative study between U.S. regulation of virtual currencies and regulations in other parts of the world. The CFTC will look at ways to promote competitiveness of the United States and United States businesses in this industry to encourage the growth of adoption of virtual currencies in segments of the commodity market that could benefit from virtual currencies and access to transparent markets in such currencies.
Perhaps the most significant part of H.R. 923 is a requirement for the CFTC to recommend, if determined appropriate, an optional regulatory structure for virtual currency spot markets (such as exchanges) that includes federal licensure, market supervision, consumer protections, and preemption of state money transmission licensing. In doing so, the CFTC will also need to clarify which virtual currencies qualify as commodities under the Commodities Exchange Act, both with respect to existing currencies and ones that may be created in the future.
The bills are now being considered by the Committee on Financial Services and the Committee on Agriculture.
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