Gensler on board with CFTC taking over Bitcoin oversight

In a surprise move for the industry, Securities and Exchange Commission Chairman Gary Gensler supports allowing the Commodity Futures Trading Commission to oversee bitcoin.

Regulators must work together to establish clear guidelines around cryptocurrency technology and investments to protect investors, Gensler said during his prepared remarks at the SEC Speaks event on Thursday.

“To the extent that the Commodity Futures Trading Commission (CFTC) needs additional authority to oversee and regulate crypto-non-security tokens and related intermediaries, I look forward to working with Congress to achieve this goal consistent with maintaining the regulation of crypto-security tokens and related intermediaries at the SEC,” Gensler said.

In 2018, William Hinman, the former director of the SEC’s Division of Corporation Finance, called ether a commodity. Gensler has been less clear on his personal stance regarding ether, but said the only token he would classify as a commodity would be bitcoin, during a June 2022 interview with CNBC.

The news comes after a bipartisan group of senators introduced legislation that would make the CFTC responsible for overseeing bitcoin and ether, two cryptocurrencies the senators classify as commodities. Sens. Debbie Stabenow, D-Mich., and John Boozman, R-Ark., authored the bill, called the Digital Commodities Consumer Protection Act, and introduced it in early August.

Exchanges that enable investors to trade bitcoin and ether must also register with the CFTC, the bill notes. The SEC, which is about six times the size of the CFTC, will still control some aspects of the governance of the crypto industry, but the bill does not detail exactly what this division of responsibilities will look like.

Gensler’s support for CFTC involvement in crypto regulation is not the first time the two agencies have seen eye to eye. In August, the SEC proposed an amendment to Form PF, the confidential form on which registered investment advisers are required to disclose specific information about their securities holdings.

The CFTC is considering proposing the same changes, which would require funds with at least $500 million in assets under management to disclose exposure to crypto assets. The updates would also mandate large funds to report investment concentration, as well as leverage and related trade financing.

Bitcoin rallied after the remarks, rising 1.3% and recovering from Wednesday’s dip below $19,000, along with major market indexes, in Thursday afternoon trading in New York.

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