Agencies Queue Up for Role in Crypto Regulation
Barron’s is reporting that draft legislation, expected to be released within the next few weeks would overhaul the way cryptocurrencies and digital assets are regulated and leave the SEC with significant oversight powers. Barron’s reports that a March draft of the Senate bill would leave the SEC in charge of overseeing a significant part of the crypto industry while moving some responsibilities to the CFTC. The document also outlines a path to create a new self-regulatory organization for the crypto industry to help police itself, according to the report. In an interview with Bloomberg, CFTC Chair Rostin Benham said that the derivatives regulator is a “natural fit” to regulate more of the market, given its long track record of enforcement and overseeing crypto derivatives. SEC Chairman Gary Gensler told Bloomberg that the SEC is concerned with many aspects of the crypto industry, explaining that crypto exchanges were not properly segregating different parts of their businesses such as custody, market-making, and offering a trading venue. “Crypto’s got a lot of those challenges — of platforms trading ahead of their customers,” Gensler told Bloomberg. “In fact, they’re trading against their customers often because they’re market-marking against their customers.” A recent article from K&L Gates notes that both the CFTC and SEC are asserting their jurisdiction in the crypto space and that additional clarity is needed to understand whether a digital asset should be considered a commodity (subject to the CFTC’s enforcement authority), or a security (subject to the SEC’s jurisdiction) and on whether the SEC and CFTC collectively have sufficient regulatory authority in order to properly regulate crypto markets, or if congressional action is needed.