Sens. Debbie Stabenow, (D-Mich.), and John Boozman, (R-Ark.) this week introduced a bill that aims to settle once and for all which federal agency is responsible for regulating cryptocurrencies. The question has long haunted the federal government's attempts to define its role in overseeing the industry and the ongoing battle over whether cryptocurrencies are currencies, financial securities, or commodities has hampered progress.   

According to the legislation from Stabenow and Boozeman, the answer is a commodity, which means the Commodities Futures Trading Commission (CFTC) would play the primary role in regulating the fledgling industry, skirting the boundaries of tech, finance, and payments. 

"Our bill will empower the CFTC with exclusive jurisdiction over the digital commodities spot market, which will lead to more safeguards for consumers, market integrity and innovation in the digital commodities space,” Boozman said in a statement.

Specifically, the legislation would require digital commodity platforms to crack down on abusive trading practices, adhere to advertising and disclosure standards, and mandate that all "trading facilities, brokers, dealers, and custodians" register with the CFTC. 

This would be the first time that crypto companies would have to follow industry-specific rules and standards, and answer to a federal watchdog around issues of compliance. For crypto-holders, the law could mean greater protection, but the specifics will depend on the agency wrangling an industry that has existed without supervision for its entire history. 

If passed, the bill would mark the conclusion of a nearly decade-long process to clarify the legal definition of cryptocurrencies and assign them a proper government regulator. Over that period, both the Securities and Exchange Commission (SEC) and the CFTC have offered their own arguments for why they should have a purview over regulating crypto. 

The CFTC has argued since 2015 that cryptocurrencies should be legally defined as commodities, while the SEC has pushed for regulating them as securities, based on a common legal threshold known as the Howey Test. But absent clear legislation to settle the debate, the agencies have been left to regulate the industry on an ad-hoc basis. 

Under that uncertain legal regime, the SEC has proven to be more active in cracking down on the industry on a case-by-case basis. Major enforcement actions against companies such as Ripple Labs and BlockFi, for instance, have set the tone for the government's response to crypto. They've also incurred the wrath of crypto-enthusiasts who feel the agency has overstepped its bounds, which could explain why the industry has been outspoken in supporting this bill. 

"We would find it constructive and healthy to register under such a regime, finally bringing comprehensive customer protections and oversight to spot crypto commodity markets in the US," tweeted Sam Bankman-Fried, CEO of crypto exchange FTX and an outspoken champion for widespread crypto adoption. 

The prospect of the CFTC taking over crypto regulation, though, has plenty of detractors, some of whom point out its relatively small size compared to the SEC. 

"I can't imagine it being effective at all," said John Reed Stark, a former SEC prosecutor and crypto critic. "The CFTC is so much smaller than the SEC. It's literally one-fifth of the size." 

While the bill will authorize the CFTC to impose fees on the industry to fund its expanded oversight role, it's unclear still how much money the fee will produce, or whether it will be sufficient to staff up the agency. For comparison, the agency last year had a budget of $304 million and roughly 666 employees, compared to the SEC's budget of nearly $2 billion and 4,500 full-time employees. 

But staffing isn't the only concern. It's also about institutional focus. "The SEC has a clear mission, which is to protect investors," said Stark.  That's not the CFTC's mission at all. That ethos is not part of their DNA. They're two entirely different organizations. It's giving Big Crypto exactly what they want." 

However, it's far from certain that the SEC is out of the picture. A summary of the bill noted that the bill's sponsors recognize "that other financial agencies have a role in regulating digital assets that are not commodities, but function more like securities or forms of payment." 

This doesn't jibe with the legislation itself, which makes clear that the CFTC will have "exclusive jurisdiction over, any account, agreement, contract, or transaction involving a digital commodity trade." Of course, the bill has a long way to go before it's past the finish line, and the SEC has aggressively advocated for its role in crypto regulation.