By Shelly Melancon (Switzerland)
The U.S. Commodity Futures Trading Commission (CFTC) has forwarded its regulatory framework to Congress and outlined what it wants to achieve should the proposed Digital Commodities Consumer Protection Act be approved.
CFTC Seeks Jurisdiction Over the Crypto Spot Market
Rostin Behnam, the CFTC chair, explained how his agency would regulate the crypto space. In a legislative hearing before the Senate Committee on Agriculture, Behnam laid out the commission’s plans.
The hearing is designed to assess the Digital Commodities Consumer Protection Act (DCCPA)’s suitability to empower the CFTC as the sole regulator over the crypto spot market.
Senators Debbie Stabenow, John Boozman, Cory Booke, and John Thune introduced the bill to the Senate in August.
Addressing the lawmakers, Behnam noted that:
“Most digital assets are commodities. “The experience of the CFTC coupled with its expertise makes it suitable to oversee the crypto spot market.”
Moreover, Behnam added that his agency handles customer protection through market oversight. It also has a disclosure system to ensure transparency and safe transactions.
The CFTC chair made a detailed highlight of its workings. Since 2014, his agency has issued nearly 60 enforcements in digital assets-related cases. However, due to the lack of complete information about the digital asset spot market, hindered by law, the agency relied on tips and complaints to effect enforcement.
Also read:Behnam noted that the commission has been engaging in a holistic approach to police the crypto industry with limited powers.
Furthermore, Behnam added that the agency is now equipped for the added responsibilities.
CFTC over SEC?
For some time now, the digital asset industry has been pressing for the CFTC to take over regulation of the crypto space rather than the SEC. The latest bipartisan bill approved by the Senate might be the beginning of realizing such a request.
If approved, the bill would give the CFTC exclusive jurisdiction over digital assets that fall under the “commodity” category.
Moreover, the industry has been clamoring for Congress to define which tokens constitute a commodity or security.
In addition, this would also give crypto exchanges clarity on which agency should register their listed assets. The DCCPA outlined the interaction between digital commodity brokers and the regulator.
Nonetheless, the new bill is not the first legislation to make the CFTC the primary regulator of the digital asset industry.
The “Digital Commodity Exchange Act of 2022” was the first bill to call for the CFTC’s oversight of the digital spot market in April. Representatives Ro Khanna, Glenn “GT” Thompson, Tom Emmer, and Darren Soto introduced the bill.
In June, Senators Cynthia Lummis and Kristen Gillibrand introduced the “Responsible Financial Innovation Act.”
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), believes that most cryptos are securities.
By being security products, crypto regulations should fall under the purview of the SEC, according to Gensler. Many do not favor the SEC becoming the sole regulatory body. As a result, the CFTC might be a win-win situation for the nascent digital assets ecosystem.
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