The Senate Agriculture Committee may decide the direction of cryptocurrencies. This is because the Senate Agriculture Committee oversees the Commodity Futures Trading Commission (CFTC), which is vying to become the major regulator of the cryptocurrency business. The crypto sector usually regards an expanded role for the CFTC as positive news since it sees the CFTC as a far more pro-crypto regulatory body than the SEC.
What’s notable is that the current regulatory turf battle between the CFTC and the SEC is taking place in the open. The CFTC is responding to Gary Gensler, the director of the SEC, who has openly urged his organization to regulate the cryptocurrency market. Rostin Behnam, the chairman of the CFTC, recently gave the cryptocurrency sector a bone by joking that Bitcoin’s (BTC 0.75%) price may quadruple if his organization gets to determine the laws. A doubling would push Bitcoin’s price, which is now about $20,000, on a trajectory to around $40,000.
Is cryptocurrency a security or a commodity?
It all boils down to this: Is cryptocurrency a security or a commodity? Which agency will control it, the CFTC or the SEC? The SEC has the authority to control it if it is a securities. The CFTC is in charge of regulating anything if it is a commodity. In accordance with existing regulations, a cryptocurrency is only a security if an investment contract stipulating a money-pooling scheme for a profit exists.
There is almost universal agreement that Bitcoin is a commodity in this scenario. In fact, some claim that Bitcoin is the only cryptocurrency that is exempt from federal securities regulations. In fact, according to the SEC’s Gensler, Ethereum, the second-largest cryptocurrency by market capitalization, should now be categorized as a security.
So, what exactly does the Senate Agriculture Committee know about cryptocurrencies that the SEC does not? The Senate Agriculture Committee is quite knowledgeable in the trade of commodities like wheat, corn, and pork bellies. The Senate Agriculture Committee contends that cryptocurrencies need to be regarded as exchange-traded “digital commodities.”
Additionally, the committee is well-versed in metals like gold and silver, both of which are traded on significant exchanges. And this is under the control of the CFTC. Therefore, shouldn’t Bitcoin be subject to the same regulations as actual gold if it truly is “digital gold”?
The anticipated price of Bitcoin
To be clear, it’s a little odd that the CFTC chairman would announce a price goal for bitcoin. It almost seems like he’s using a political dog whistle to say, “Hey, if you have crypto lobbying power in Washington, I’d advise you advocate for the CFTC if you want to see the price of Bitcoin grow.” This may not have been his purpose. That might explain why the CFTC plays a disproportionately large role in all the recent bipartisan legislation coming out of Washington and why the crypto sector appears to be uniting around the CFTC as the regulator of choice.
The CFTC’s chief Behnam believes that because the financial markets thrive on predictability, Bitcoin’s price may quadruple. A fair playing field helps an industry draw more participants by fostering competition. Thus, the establishment of regulatory clarity for cryptocurrencies will probably draw institutional capital inflows from Wall Street. Many of the greatest names in finance are only watching for Washington to give the go-ahead for cryptocurrency investments.
It’s possible that Bitcoin may double in price given the growing institutional interest in cryptocurrencies this year. For instance, some expected that Bitcoin would soar over $250,000 when BlackRock announced a collaboration with Coinbase to facilitate crypto trading for institutional clients. That was predicated on the idea that major endowments and pension funds would start putting a tiny amount of their holdings into cryptocurrency. So while raising the price to $40,000 might sound absurd at first, it is definitely not impossible.
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