- The CFTC has argued why it is the best-suited consumer protector and risk mitigator of the crypto space.
- Similarly, the SEC has previously sought the lead role in crypto supervision, while Coinbase thinks a new regulator is required.
The cryptocurrency industry is highly in need of regulation, and much has been communicated and widely agreed upon. But who exactly should this mandate go to? The Commodities and Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), or a completely new body?
The CFTC has made its case, explaining yet again, why it should have the lead role in regulating digital assets. A Tuesday letter to the House and Senate Agriculture Committees paints the watchdog as the best consumer protector and risk mitigator in the crypto space.
Written by CFTC Chairman Rostin Behnam, the letter says his agency already embodies core principles that help regulate a wide range of markets, including digital assets.
The CFTC as the crypto police
The SEC, on the other hand, has in the past, shown itself the best regulator for the digital asset space. Its chairman, Gary Gensler, argued that many crypto projects have raised money from investors. This characteristic places them under US securities laws:
There are thousands of these projects, basically trying to raise money from the public so that they can back an entrepreneurial idea,” Gensler told CNBC last month.
That part’s all right—that is called innovation—but it’s about bringing it into the securities laws.
What the CFTC and the SEC agree on, is that the current laws may be adequate in exercising control over the digital asset space. Differently, industry players, such as the prominent Coinbase exchange, have called on the authority of a completely new federal regulator.
However, this inclination is quite unlikely to gain approval, the reason being, an upcoming presidential executive order. The Biden Administration is reportedly working on a directive that will divide the responsibilities of crypto research and regulation among pre-existing agencies.
In his letter, Benham emphasized the need to clarify crypto regulations soon, given the number of crypto retailers.
… important principles are missing from the current regulatory framework applicable to digital asset markets that we see in other federally regulated markets, particularly ones that primarily cater to retail investors.
He testified just as much during a Wednesday Senate hearing, noting:
The digital asset market, which at present is most directly supervised through state money transmitter licenses, is unique, and presents many novel issues for the CFTC, given our limited authority to police these volatile markets.
In attendance was FTX CEO Sam Bankman-Fried, who agreed that the CFTC should carry the weight of crypto supervision.
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