US Senator Demands Regulatory Clarification on Digital Currencies

US Senator Tom Carper yesterday called on the Commodity Futures Trading Commission (CFTC) to clarify its position on digital currencies.

Carper is a Delaware Democrat and he currently heads up the Homeland Security and Governmental Affairs Committee. It should be noted that Delaware is home to many credit card companies in the US, thanks to business-friendly regulations that have attracted numerous financial institutions to the state.

According to Bloomberg, Carper’s staff are already working on a report on digital currencies, scheduled for release sometime in the spring. Carper’s email to the CFTC was a response to an earlier letter from former CFTC chair Gary Gensler. He, in turn, was responding to an inquiry on digital currencies filed by Senator Tom Coburn of Oklahoma.

 No clampdown, potentially

The tone of Carper’s email is interesting: “Given that we read about a new venture in the digital currency space nearly every day, it is important that our government agencies respond appropriately and in a timely manner with thoughtful policy and oversight.”

“Those willing to take risks and play by the rules should have the opportunity to thrive without the fog of uncertainty.”

It appears that Carper isn’t looking for a clampdown on digital currencies – he merely wants to eliminate any ambiguities.

Previously, the CFTC told Senator Coburn that the commission does have a set of policies and procedures specific only to digital currencies, the commission’s regulatory authority is limited, as it only extend to future and swaps contracts in any commodity.

Definition of a commodity

Former CFTC chairman Gensler told Coburn that his hands were essentially tied, although he did point out that the law has a broad definition of what a commodity is.

Despite that, Gensler did not reveal any plans to further regulate digital currencies, although he did mention the CFTC’s “broad enforcement powers”.

In other words, instead of eliminating ambiguity, it could even be argued that Gensler generated more of it, as it remains unclear whether the CFTC has the authority to regulate digital currencies in an effective fashion. Furthermore, it is unclear whether it is interested in doing so in the first place.