Becky Powell
Since the creation of Bitcoin in 2008, the cryptocurrency market has grown exponentially and remained relatively free from government oversight. Only within the last five years have federal agencies begun to regulate the risks the industry poses. Their response to date, though, has been piecemeal because they lack explicit, statutory jurisdiction over the industry. As a result, the cryptocurrency market faces several risks that threaten to derail its future growth. For one, the industry is a playground for criminal activity, including everything from money laundering to fraud to cyberattacks. The market is also extremely volatile, and consumers have little understanding of the underlying technology in which they are investing. Furthermore, the industry is in its early stages and has not yet developed mechanisms to mitigate these risks. Commentators initially rejected government interference out of fears it would chill the industry’s development. Now, they are increasingly calling for Congress to provide guidance. Congress has proposed a few bills, the most recent by Congressman Michael Conaway (TX-11). Conaway’s bill, the Digital Commodity Exchange Act, would give the Commodity Futures Trading Commission explicit jurisdiction over cryptocurrency when used as a commodity. Although the bill is imperfect, it presents a potential path forward for Congress and the industry. Similar legislation that grants federal agencies jurisdiction over cryptocurrency based on how it is used would create the regulatory flexibility and societal trust that the industry needs to continue to develop successfully.