SEC Chair Wants Single Rulebook for Crypto in the US; No More SEC vs. CFTC?

Paigambar Mohan Raj
Source: MoonCatcherMeme

According to The Financial Times, US Securities and Exchange Commission (SEC) Chair Gary Gensler is looking for an agreement between the SEC and the Commodity Futures Trading Commission (CFTC). This is in hopes of adequately regulating crypto assets by developing a single rule book for everything related to cryptocurrency.

Gensler has advocated for a crypto rule book, saying it should direct the sector and fix regulatory loopholes. This comes in light of the continuing dispute between the SEC and CFTC over which organization would have regulatory power over cryptocurrency trading. While the CFTC regards cryptocurrencies as commodities like gold, the SEC sees them as securities.

According to Gensler, a single set of rules is necessary to prevent dishonest actors from taking advantage of the present regulatory loopholes. Some have blamed a lack of regulation for the high prevalence of deceptions and manipulations in the crypto realm.

While speaking to The Financial Times, Gensler stated,

“I’m talking about one rule book on the exchange that protects all trading regardless of the pair — [be it] a security token versus security token, security token versus commodity token, commodity token versus commodity token”

The SEC Chair said he was working on a Memorandum of Understanding (MoU) between the SEC and CFTC to fill any potential regulatory loopholes.

A bipartisan bill introduced by US senators Kirsten Gillibrand and Cynthia Lummis suggested a crypto regulatory framework to expand the CFTC’s authority. However, this was based on the premise that most digital assets resemble commodities rather than securities.

According to Rostin Behnam, who was named CFTC chair in January, there may be hundreds or even thousands of tokens, including bitcoin and ether, that qualify as commodities.

Behnam and Gensler both declined to comment on whether extending the CFTC’s authority over cryptocurrencies would produce conflict or muddle with the SEC. Behnam noted at a conference earlier this month that the Gillibrand and Lummis measure did a very nice job of separating apart securities and commodities tokens.

A few days later, on a different occasion, Gensler refrained from commenting on the bill but issued a warning about undercutting current safeguards in a “$100tn capital market.”

Friction between the SEC and the CFTC would do no good to the crypto industry or investors. It would be preferred if the two bodies could come to a common ground and work towards better serving the investors they have vowed to protect. A single rule book, in that regard, could bring the two together and help close all gaps in regulations.