Following the Lummis/Gillibrand new crypto bill, which seeks to delegate much of crypto regulation to the CFTC, its chairman, Ross Benham, has stated that his agency is prepared to move further into the crypto regulatory space and detail which cryptos would fall under its jurisdiction.
The new crypto bill is still a proposal that could be broken down into pieces, adjusted, and passed in a couple of years.
However, it expresses many of the concerns shared by ordinary cryptocurrency investors. One of these major concerns is the SEC’s perceived impediment to crypto innovations, as well as what appears to be a complete lack of ability to clarify where crypto stands on a regulatory level going forward.
Gary Gensler, the chairman of the Securities and Exchange Commission, is extremely unpopular because all of his actions thus far have tended toward enforcement rather than any kind of constructive discussion.
Obviously, there are scams in the crypto sector, and they must be identified and dealt with as soon as possible. Nonetheless, there are legitimate crypto projects out there that simply want a conversation and direction on how to proceed in a compliant manner.
The SEC has not been able to instill confidence in crypto companies to begin coming forward and engaging in proper discussions, and given how important the sector is for developing ground-breaking technologies, having such a negative and unapproachable regulator is simply not helpful.
Rostin Benham, chairman of the CFTC, appears to be eager to expand his agency, which has previously been one of the smallest. He was on a panel discussion at Consensys yesterday, and he said about cryptocurrencies:
As we watch these coins evolve and change, I believe it’s important… to start drawing lines between which coins are commodities and which coins are securities.
The proposed demarcation, according to the tone of the new crypto bill, is likely to bring a large portion of the crypto sector under the supervision of the CFTC. Benham also clarified his agency’s role with cryptocurrencies, saying:
We are a derivatives regulatory authority. We do not regulate cash transactions in agricultural, energy, or metal products. However, the [crypto] market that is emerging is retail-oriented and highly speculative, he elaborated. It is critical to use the [CFTC’s] infrastructure for commodities coins. And give the CFTC more authority so that we can regulate cash digital commodities. And simply leveraging our experience and expertise.
Nonetheless, under a potential CFTC regime in the future, it may not be all plain sailing for crypto. The CFTC has its critics, and one persistent charge is that it has done nothing to address alleged manipulation in the precious metals markets, particularly silver.
Whatever happens, crypto will have to be regulated primarily by people with conventional financial market backgrounds and given their entrenchment in the current system and apparent distrust of the new crypto sector, things are unlikely to be simple.
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