Delaware Senator Tom Carper’s quest to mark uncharted Bitcoin-related territory continued this week with a request that the Commodity Futures Trading Commission (“CFTC”) elaborate on any plans it has to regulate the virtual currency industry. According to Senator Carper, head of the Senate Homeland and Governmental Affairs Committee, “we read about a new venture in the digital currency space nearly every day, [and] it is important that 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 was presumably in this spirit that Carper sent letters in August 2013 to the Department of Homeland Security, Justice Department, Federal Reserve, Securities and Exchange Commission, Commodity Futures Trading Commission, and Office of Management and Budget requesting disclosure of their virtual currency policy development, implementation and regulation. (See http://www.perkinscoie.com/virtual-currency-government-scrutiny-continues-to-grow-08-20-2013/.) Those letters were followed by the first congressional hearing regarding the technology on November 18, 2013, with which the Senator seemed pleased, commenting that Treasury, the IRS, the Justice Department, and the Consumer Protection Bureau were all communicating with each other and collaborating on how to avoid corruption of the virtual currency space. Conspicuously absent from the list of collaborators, however, was the CFTC, whose former chairman, Gary Gensler, stated, “the Commission does not have policies and procedures that are specific to virtual currencies,” and declined to lay out any plan to regulate virtual currencies or approve products based on them. The CFTC’s lack of a set plan for regulating virtual currencies might not matter much to Carper, however, as he has been assured by federal agencies, from the IRS to the FBI, that they can police illicit uses of crypto currencies, such as money laundering or drug trafficking, through the country’s current legal framework.
Carper originally became interested in Bitcoin after learning that it could be used in illicit transactions, but has since acknowledged that “there’s some good things that can happen there.” He drew a parallel between the internet and Bitcoin, saying that “when the internet was young . . . some people said it ha[d] some downside potential with drug transactions and money laundering. The early message on the internet was, let’s not kill the baby in the cradle. I think there is some upside her for Bitcoin and other virtual currencies.” Carper’s staff is now writing a report about virtual currencies, which will be released by the spring of this year.
How will the CFTC respond to Senator Carper’s inquiry? Will the CFTC take the lead in setting regulations? Stay tuned and we will continue to keep you informed of developments.