At an industry conference today, Securities and Exchange Commission (SEC) chief Gary Gensler said that he supports handing the Commodity Futures Trading Commission (CFTC) the power to “oversee and regulate crypto nonsecurity tokens and related intermediaries.”
Gensler stressed that should Congress give the CFTC prime oversight over crypto, his own federal agency shouldn’t be overlooked.
“Let’s ensure that we don’t inadvertently undermine securities laws underlying $100 trillion capital markets,” he said. “The securities laws have made our capital markets the envy of the world.”
There hasBitcoin been a flurry of proposals, both from the crypto industry itself and from Washington, to delegate oversight of the crypto industry to the CFTC, which presently only has the power to regulate derivatives.
Gensler has previously said that Bitcoin is a commodity, not a security, but many believe he wants to find a way to bring Ethereum, the world’s second-largest cryptocurrency by market capitalization, under SEC control.
Crypto lawyer Jake Chervinsky took to Twitter after the news broke to argue that Gensler still has Ethereum lined up in his crosshairs.
For context, there have been rumors for a while that Chair Gensler's SEC would love to walk away from its June 2018 guidance saying ETH isn't a security, but they haven't found a credible way to do that yet. (There isn't one.) I don't read this article as him giving even an inch.
— Jake Chervinsky (@jchervinsky) September 8, 2022
CFTC and crypto
Back in February, CFTC chief Rostin Behnman made a case for expanding his agency’s authority to include crypto in a letter to the House and Senate Agriculture Committees.
He asserted that the CFTC was best positioned to protect consumers from the market’s risks.
In April, a bipartisan group of lawmakers introduced a bill to regulate developers, dealers, and exchanges working with cryptocurrencies. Their Digital Commodity Exchange Act proposes to expand the CFTC’s regulatory power, giving it direct oversight over exchanges and nonsecurity cryptocurrencies.
In June, Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) introduced their bipartisan Responsible Financial Innovation Act.
Lummis spoke to Decrypt at the time and sketched an overview of her proposed system, whereby the CFTC handles most cryptocurrencies as commodities while the SEC oversees the investment products stemming from them and any tokens that are closer in law to securities.
In July, the CFTC announced it was opening a new tech innovation office and staffing it with industry experts to gain a better understanding of the industry in preparation for its role as a regulator.
The Senate Agriculture Committee introduced the Digital Commodities Consumer Protection Act (DCCPA) a month later. It proposes to grant the CFTC “exclusive oversight” over “digital commodities.”
The DCCPA also mandates brokers, custodians, dealers, and trading facilities that deal in digital commodities to register with the CFTC or face penalties.
While nothing has passed Congress yet, there is a lot of demand from both lawmakers and the industry to grant the CFTC prime oversight.
In any case, many crypto fans believe Gensler is looking to take as much control as he can get.