Former CFTC Chair claims that crypto regulation solely falls under the jurisdiction of the CFTC.
The SEC still intends to institute its authority in the crypto industry as the ecosystem largely lacks investor protection.
Former CFTC Chair Christopher Giancarlo has argued that the US Commodity and Futures Trading Commission (CFTC), is the only agency with experience in regulating crypto. The former CFTC chair claimed that cryptocurrencies do not fall under the SEC jurisdiction. Further, he urged the Biden administration to nominate a CFTC chairman if it is keen on regulating crypto.
Additionally, CFTC Commissioner Brian Quintenz backed these statements. Shortly after Giancarlo’s Twitter remarks, Quintenz also tweeted that the CFTC and not the SEC should regulate crypto. He argued that cryptocurrencies are commodities and therefore under the CFTC authority. The SEC, on the other hand, solely deals with securities.
Just so we’re all clear here, the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, golf, oil…or crypto assets.
Subsequently, the US House Committee on Agriculture, a standing committee in the US House of Representatives expressed similar views. Through its official Twitter account, the committee argued that crypto is “bigger than the SEC”. Furthermore, Congress “needs to write the rules of the road to protect investors and innovation in the digital economy.”
CFTC response to SEC regulation of crypto assets
Lately, there has been a lot of tumult surrounding the regulatory status of cryptocurrencies, including stablecoins and crypto derivatives. Speaking at the Aspen Security Forum, SEC Chair Gary Gensler assured the SEC’s mandate covers the crypto industry. He also called for the agency’s increased regulatory oversight to include decentralized exchanges.
Nevertheless, the SEC boss has in the past, deemed Bitcoin, not a security. He still, however, has not given any stand on Ethereum’s classification despite numerous inquiries into the same. Rather, he has stressed that crypto-assets and their trading platforms lack adequate investor protection. This makes them susceptible to price manipulation among other illegal activities.
On the other hand, the CFTC declared years ago that crypto assets, including Bitcoin, are commodities. A statement on the regulator’s website explains,
Virtual currencies, such as Bitcoin, have been determined to be commodities under the Commodity Exchange Act (CEA).
Crypto regulation mayhem
In 2018, the US District Court for the District of Massachusetts ruled that cryptocurrencies are commodities. The CFTC, therefore, is warranted to prosecute crypto-related fraud cases. More so, the Digital Asset Market Structure and Investor Protection Act made a new pronouncement on crypto regulation. Introduced last week by US Representative Don Beyer, the Act gives the SEC authority over “digital asset securities.” The CFTC, on the other hand, is provided “authority over digital assets.”
In the past couple of years, however, the CFTC and the SEC have been working closely on cryptocurrencies consumer protection. Jointly, they have issued a number of what they call Investor Alters to inform investors regarding digital currencies. Topics covered include funds trading in Bitcoin futures and websites promoting fraudulent crypto trading.
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