CFTC Commissioner Urges Cooperation With Crypto Regulators
Commodity Futures Trading Commission (CFTC) Commissioner Summer Mersinger says Congress must order the Securities and Exchange Commission (SEC) to work with the CFTC when drafting crypto legislation.
Speaking at the DC Blockchain Summit, Mersinger said the agencies were unlikely to agree on legislation unless Congress mandated cooperation.
CFTC Commissioner Calls on Congress to Unify Crypto Regulators
“Do I think it’s going to happen on its own? No,” she asked. “I think we’re probably going to need some sort of legislative mandate to force us to sit down,” she speculated.
Joint Commissioner Kristin Johnson joined Mersinger for the Forward Thinking: Policies Shaping The Digital Asset Markets, Act I fireside chat.
When asked how crypto intermediaries are defined under the CFTC, Johnson said she supported new cybersecurity rules and requirements for client funds to be kept separate.
Mersinger’s remarks come amid intense regulatory scrutiny of the industry following several high-profile crypto failures. The failures, including the collapse of Bahamian exchange FTX and, most recently, the depegging of a major US stablecoin, have seen efforts to regulate the industry falter. Chair of the House Financial Services Committee, Maxine Waters, recently committed to advancing US stablecoin legislation. This renewed urgency came after the USDC was decoupled following the collapse of Silicon Valley Bank.
Collaboration can lead to better definitions
Commissioner Mersinger’s calls for collaborative legislation come when the US crypto-regulatory landscape is arguably at its worst. Greater cooperation could bring more clarity to crypto bills awaiting passage in Congress.
The Digital Commodity Exchange Act of 2022 and the Digital Consumer Commodities Protection Act of 2022 emphasize the CFTC’s role in spot markets for digital assets.
The Digital Commodity Exchange Act of 2022 states that the SEC has jurisdiction over digital assets that represent an ownership stake. Assets that do not “convey rights and obligations typically associated with a security” should be considered a commodity. This definition would bring them under the CFTC’s authority. The SEC may clarify the term “ownership” and, in doing so, provide greater definition to the CFTC’s authority.
The Lummis-Gillibrand Responsible Financial Innovation Act requires digital asset exchanges to register with the CFTC. It places assets that give owners an economic interest in a business entity under the SEC’s jurisdiction. Absent from this bill is what constitutes a security or commodity, which the SEC can help clarify.
The SEC has issued enforcement actions against crypto projects for offering unregistered securities without further guidance on how projects can comply with securities laws. SEC Commissioner Hester Peirce said in a recent Bankless podcast that the SEC should regulate capital raising.
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