CFTC Chair Behnam Optimistic About Legislation; Senators Make Urgent Crypto Taxation Request

CFTC Behnam on legislation

Speaking at yesterday’s Security Traders Association conference in Washington, D.C., Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam participated in a fireside chat and said that he remains optimistic – but realistic – about digital asset legislation prospects given the election cycle.

He said, “So, it’s been a tough ride over the past couple of years because there are, in fact, opponents. But there’s been a number of legislative efforts in both the House and the Senate. Obviously, it took a little bit of a pause last year with a number of failures and bankruptcies in the crypto space. This, to me, feels like something that’s inevitable. When it happens, as we’re approaching, obviously, 2024 in an election year, remains to be seen -obviously a lot going on on The Hill right now: shutdowns, elections and whatnot.”

Behnam continued, “But, this remains a priority of a number of members of Congress on both the House and Senate side, and it’s just a matter of process: the friction of partisanship and debate and policymaking that hopefully we’ll come up with a sound policy that gives us additional authority over the commodity markets and, of course, gives the SEC what it needs to regulate the securities market.”

letter – crypto tax

Bloomberg’s Allyson Versprille reported yesterday on X that a group of senators led by Sen. Elizabeth Warren (D, MA) and Sen. Angus King (I, ME) are requesting that the date be moved up two years for crypto exchanges and brokerages to report client transactions to the federal government. Bloomberg’s headline says that the goal is to “Snag Crypto Tax Cheats.”

See the Congressional letter dated October 10 which was sent to Treasury and the IRS. Five other Democratic Senators signed on including Sen. Richard Blumenthal (CT), Sen. Bernie Sanders (VT), Sen. Brian Schatz (HI), Sen. Sheldon Whitehouse (RI) and Sen. Gary Peters (MI).

Currently, the plan is for required reporting to commence with the 2025 tax year. View more on the rules proposed in August by U.S. Treasury and the Internal Revenue Service for crypto taxes. Responses for the proposal are due October 30.

In response, policy executive Alexander Grieve of venture firm Paradigm said on X yesterday, “… calling to push up the implementation deadline, therefore, is just an unambiguous statement that… 1) they deeply dislike the industry (shocker)… 2) they don’t care if compliance costs put many crypto companies out of business – killing thousands of American jobs.”

Operating in parallel are the leaders of the Senate Finance Committee, Chair Ron Wyden (D, OR) and Ranking Member Mike Crapo (R, ID) who concluded a request for input on crypto taxes and regulations on September 8.

Where the Congressional crypto tax debate nets out remains an open question. Still, through the noise, crypto users have always been required to pay taxes every year.

terrorism and crypto

In the wake of yesterday’s Wall Street Journal article on terrorist financing with crypto using data from blockchain analytics firm Elliptic, Politico reached out to Sen. Warren for her reaction. Warren re-introduced the Digital Asset Anti-Money Laundering Act [S.2669] back in July and is a co-sponsor of a much “lighter” version of the bill via a July amendment [S.Amdt.712] to the National Defense Authorization Act co-sponsored by Sen. Roger Marshall (R, KS), Sen. Cynthia Lummis (R, WY) and Sen. Kirsten Gillibrand (D, NY).

Warren told Politico, “There is a growing bipartisan coalition of senators pushing to crack down on crypto-financed crimes, and it’s time to act with urgency to ensure law enforcement has the resources and authority to protect innocent people.” Read a bit more.

Chamber of Digital Commerce policy executive Cody Carbone commented yesterday on the Wall Street Journal’s article saying, “This is extremely disingenuous. Hamas stopped fundraising in cryptocurrency due to the public nature and traceability of the blockchain in early 2023. Using crypto as a scapegoat for terrorism or any illegal act is trite. This is the narrative the anti-crypto army creates devoid of fact.” Read a bit more on X.

banks eye settlement

One of the key benefits to using blockchain technology in finance is that it cuts out some of the many intermediaries (and fees) which may exist from legacy systems – the settlement layer, for example.

JP Morgan announced yesterday that it is now offering clients blockchain-enabled collateral settlement for clients using blockchain. Tyrone Lobban of JP Morgan’s Onyx Digital Assets told Bloomberg, “JPMorgan’s Tokenized Collateral Network, or TCN, was used by BlackRock Inc. to turn shares in one of its money market funds into digital tokens, which were then transferred to Barclays Plc as collateral for an over-the-counter derivatives trade between the two institutions.” Read more.

It was just last week that JP Morgan’s UK bank Chase announced that local retail customers would no longer be able to fund crypto transactions. The nuance across jurisdictions and applications of blockchain tech will only increase.

letter to the editor

In a letter to the editors of the Wall Street Journal published yesterday, a reader takes issue with a review by WSJ editor Barton Swaim of two recent crypto-related books by Michael Lewis and Zeke Faux.

“Barton Swaim complains about a ‘currency backed by nothing,’ referring to cryptocurrency (“Crypto and the Smart Set,” Bookshelf, Oct. 6). How does that description differ from our government’s money?,” writes Robert Hellam.

still more tips

Opinion: Don’t buy Bitcoin’s dishonest attempt to paint itself green – The Hill

Less than 50% of Hong Kong retail crypto investors aware of relevant regulations: Survey – Cointelegraph

Amazon and Immutable team up to advance Web3 gaming – Blockworks

Crypto token ether could rise five-fold by end-2026, UK Bank Standard Charter says – Reuters

Stablecoin USDR, Backed by Real Estate, Loses $1 Peg – Unchained