Fresh on the heels of the Lummis/Gillibrand new crypto bill that seeks to transfer much of crypto regulation over to the CFTC, Ross Benham, its chairman, has said that his agency is ready to move further into the crypto regulatory space and define which cryptos would come under its jurisdiction.
The new crypto bill is very much a proposal, and may possibly be broken down into pieces, adjusted, and maybe passed a couple of years down the road.
However, it voices many of the concerns felt by ordinary crypto investors. One of these main concerns is the perceived hindrance of the SEC to innovations in crypto, and what appears to be a complete lack of ability to clarify where crypto stands on a regulatory perspective going forward.
SEC chairman Gary Gensler is extremely unpopular given that all his moves so far have tended towards enforcement rather than any kind of helpful discussion.
Obviously, there are scams in the crypto sector, and these need to be rooted out and dealt with quickly. Nonetheless, there are perfectly legitimate crypto projects out there that just want a conversation, and guidance as to how they can move forward in a compliant way.
The SEC has not been able to give crypto companies the confidence to start coming forward and open up proper discussions, and given how important the sector is for coming up with ground-breaking technologies, having such a negative and unapproachable regulator is just not helpful.
CFTC chairman Rostin Benham certainly appears keen on the opportunity to grow his agency, which hitherto has been one of the smallest. He was at Consensys on a panel discussion yesterday, and he said on cryptocurrencies:
“As we see these coins develop and change, I think it’s important … to start to draw lines around which coins are commodities and which coins are securities,”
According to the tone of the new crypto bill, the proposed demarcation is likely to bring a huge amount more of the crypto sector under the supervision of the CFTC. Benham also clarified the role of his agency in relation to cryptocurrencies, saying:
“We are a derivatives regulator. We don’t regulate cash transactions in agricultural products or energy products, or metals products. But this [crypto] market that we’re seeing emerge is retail-oriented and highly speculative,” he explained. “For those coins that are commodities, it’s important to use [CFTC’s] infrastructure. And provide additional authority to the CFTC so that we can regulate cash digital commodities. And just leveraging the experience and expertise that we have.”
Nevertheless, it may not all be plain sailing for crypto under a potential CFTC regime in the future. The CFTC also has its detractors, and an ongoing accusation is that it has been unable to do anything about alleged manipulation in the precious metals markets, and silver in particular.
Whichever way things go, crypto is going to have to be regulated mostly by people who have traditional financial market backgrounds, and given their entrenchment in the existing system, and a seeming distrust of the new crypto sector, things are not likely to be straightforward.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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