CFTC Coming For Bitcoin?

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Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news.

CFTC Coming For Bitcoin?

Today, we will discuss the CFTC’s upcoming action on Bitcoin, but first, we need some background. 

The U.S. has the Securities and Exchange Commission (SEC), which has jurisdiction over securities, including stocks and bonds. The SEC has also defined securities to include a larger category called investment contracts, as measured by the Howey Test. 

However, the SEC mainly regulates familiar things like stocks and bonds. It does NOT have and has NEVER had jurisdiction over currencies or commodities; those, at least commodities, come under the CFTC, the Commodity Futures Trading Commission. By its name, you can understand its focus.

The CFTC has jurisdiction over futures, swaps, and some options. 

Swaps are just another kind of derivative that comes into various categories. These futures include physical commodity futures like wheat futures, corn futures, and crude oil futures. 

You also have currency futures, such as the Australian dollar futures, interest rate futures, like the 10-year note treasury futures, and stock index futures, like the S&P e-mini futures. Note the keyword here is futures. 

What they do NOT have jurisdiction over and have NEVER had jurisdiction over is the buying and selling of the underlying spot commodities. 

They can regulate wheat futures but can’t regulate wheat, corn, or crude oil—the underlying spot commodities that underpin futures contracts. 

The CFTC’s jurisdiction over spot commodity markets like wheat, corn, and crude oil is limited to rare fraud and market manipulation cases that would affect the fair settlement of futures contracts.

There’s no historical precedent for the CFTC to regulate spot Bitcoin and its trading on U.S. spot exchanges. The SEC clearly cannot regulate spot Bitcoin, though it can and does regulate spot Bitcoin ETFs, which are securities. 

The SEC cannot regulate Bitcoin because it’s a globally recognized digital commodity. 

Now, some Senate Democrats want that to change and are trying to bring the regulation of the trading of spot Bitcoin under the jurisdiction of the CFTC, which is what today’s video is about.

Government agencies constantly compete to increase their power and annual budgets by regulating more stuff. Today’s attempted power grab is being brought to you by yet another career politician and member of the unproductive class. 

In this case, the Senior Senator from Michigan, Debbie Stabenow. 

She does have a name that makes you wonder if she’s the kind of politician who stabs you in the back—Senator Stabenow. Lawmakers look to forge ahead on legislation that will give the CFTC authority over crypto, citing urgency. 

I don’t know what kind of urgency that is, apart from the upcoming November elections. 

From this article from The Block: 

• “Stabenow is looking to advance legislation regulating crypto and giving the CFTC regulatory authority over digital commodities, not just the futures but also the underlying commodities.” 

She met with committee Democrats on Monday night to discuss getting the bill to a markup to make that happen this summer. Senate Democrats are trying to get something passed by both houses and signed by President Biden before the November elections and before a more Bitcoin-friendly administration, like Trump’s, can take office.

This is not the first time that Senator Stabenow has tried this. She tried this in August 2022 with the Digital Commodities Consumer Protection Act of 2022.

Whenever the government passes something that’s supposed to protect you, you can be sure that you’re being fleeced, robbed, and controlled. 

According to the website OpenSecrets, the biggest backer of the Digital Commodities Consumer Protection Act of 2022 was Sam Bankman-Fried, the fraudster from FTX, who lobbied for it more than any other legislation in 2022. 

If this current version of the bill passes in 2024: 

• Any company that touches Bitcoin in the U.S. will be subject to increased and cumbersome compliance and surveillance, endless paperwork, and increased KYC requirements—not just exchanges, but any company that touches Bitcoin.

It gets even worse: 

• If the CFTC were to gain jurisdiction over the trading of spot Bitcoin on exchanges, it would have the power to pause the trading of spot Bitcoin on exchanges in the U.S. whenever it wanted to or at the request of Congress or the President. 

This is classic circuit breaker power, and who would want to have it? 

The problem is, in the coming financial crisis, as the U.S. dollar continues to sink, the CFTC could be mobilized to “pause trading”, stop trading for months, weeks, or years on end, in an attempt to stem the outflows from fiat to Bitcoin, at least on the centralized exchanges in the U.S. 

This won’t work because Bitcoin trades globally. 

It also trades peer-to-peer. You and I can trade it without needing an exchange. We can exchange goods and services for Bitcoin or fiat for Bitcoin, and no one can stop us. No one can stop me from sending Bitcoin to anyone I want. 

No one can stop you or me from storing our Bitcoin without needing help from a bank or a brokerage account. No one can stop the adoption of Bitcoin, but they can certainly attempt to slow it down.

This is an especially nasty move by the Senate Democrats before the November elections, trying to get this passed before we have further regulatory clarity. 

Let’s stop the CFTC before it starts. Contact your Representatives and Senators and tell them to vote against Stabenow’s and other similar bills.

Bitcoin University is an educational channel devoted to Bitcoin, financial freedom, and self-sovereignty. Matthew also covers relevant macro and financial news. 

Learn more at: https://www.bitcoinuniversity.com/  
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