CFTC Edges Closer to Becoming Primary Overseer for Crypto

According to CFTC Commissioner Summer Mersinger, US policymakers are moving closer to placing the agency on top of crypto regulation.

The designation will expand the mandate of the CFTC and pave the way for it to regulate digital assets such as cryptocurrencies and non-fungible tokens (NFTs). Mersinger made the remarks at the Reuters Commodity Trading USA conference in Texas this week.

From an industry perspective, a CFTC regulating cryptocurrencies would be a better choice than the Securities and Exchange Commission (SEC), whose chairman, Gary Gensler, thinks they are securities and should be regulated in the same way as stocks. He has previously referred to stablecoins as casino poker chips highlighting the underlying disapproval of the industry.

senator support

Several industry executives have supported a bill put forward on June 7 by US Senators Cynthia Loomis and Kirsten Gillibrand to make the CFTC the industry’s primary regulator. Mersinger commented:

“You see the industry becoming the primary regulator around the CFTC.”

Still, the bill has yet to be passed, but it has started Congressional discussions about which agency should regulate the crypto industry. In April it was reported that the two agencies would join forces for cryptocurrency regulation, but this seems to have fallen by the wayside.

Mersinger said that the CFTC has begun a review of its potential role in cryptocurrencies. Employees are researching the regulation of the spot crypto trading market as a starting point. “We are still a strong regulator, but our registrants have a lot of flexibility,” she said.

If the SEC becomes the industry regulator it will not have this flexibility as crypto companies will need to jump through hoops similar to banks and stock brokerages in order to be registered and approved.

If the CFTC becomes the watchdog of the industry, most digital assets will be treated as commodities rather than securities. The head of the agency, Rostin Behnum, also approved the Loomis-Gillibrand bill, commenting on June 8:

“One of the hardest things that we’re going to have to do — and I think they address it very well — is the understanding between an object and a security.”

Loomis met with Gary Gensler this week to seek feedback on the bill, but he has yet to comment. as reported by cryptopotatoBoth agencies view bitcoin and ethereum as commodities, but the remaining 13,300 or so tokens listed on platforms like CoinGecko remain a gray area.

A win for the crypto industry

Messari founder Ryan Selkis commented that the bill could accelerate the approval of spot crypto exchange-traded funds (ETFs) in the US and remove Gensler as the current hurdle.

The Lummis-Gillibrand bill would help advance the bitcoin spot ETF, and remove Gary Gensler as a blocker of US crypto progress.

It’s not perfect, but it’s a great starting point for comprehensive legislation.

— Ryan Selkis (@twobitidiot) 9 June 2022

Galaxy Digital CEO Michael Novogratz said the bill was “extremely positive”, bringing “three joys” to the senators. “It’s shocking how many Democratic politicians now in my office are increasingly speeding up and trying to set the right stance on the crypto industry,” he said at a conference on June 8.

Featured image courtesy of TimesofIsrael