The chairman of the US Stock Exchange and Securities Commission. UU. seeks to close deals with other financial agencies to prevent cryptocurrency operators from escaping between the cracks of the fragmented U.S. regulatory structure.
Gary Gensler told the Financial Times that he was talking to his Commodity Futures Trading Commission counterparts about a formal agreement to ensure that digital token trading had the proper guarantees and transparency.
His proposal comes as U.S. authorities ’efforts to oversee cryptocurrencies become entangled in Washington policy, potentially reducing the SEC’s influence over digital assets. Capitol Hill lawmakers are rushing to clarify what is legal and who is responsible for oversight.
The SEC and CFTC have historically focused on different aspects of financial markets and rarely work together. The SEC primarily oversees CFTC securities and derivatives; cryptocurrencies potentially span both markets.
At the same time, fines for enforcement actions increase. U.S. regulators have raised $ 3.35 million in cryptocurrency enforcement actions since the advent of Bitcoin in 2008, according to government data collected by British cryptocurrency analysis company Elliptic, including $ 179.7 million in the first six months this year. The SEC accounted for more than 70 percent of the sanctions.
Gensler said he was working on a “memorandum of understanding” with the CFTC, which he headed from 2009 to 2013. The SEC has jurisdiction over platforms that list tokens that are considered securities.
If a token representing a commodity appears on a SEC-supervised platform, the securities regulator “would send that information to the CFTC,” Gensler said. The CFTC declined to comment.
“I’m talking about a rulebook in the stock market that protects all trading regardless of the pair: [be it] a security token against a security token, a security token against a commodity token, a commodity token versus a commodity token “to protect investors from fraud, leadership, manipulation, and provide transparency in order books,” said Gensler.
The digital asset market has been dominated in recent months by the impact of falling prices. The price of bitcoin fell more than two-thirds from an all-time high of nearly $ 70,000 in November. Scholarships fired staff and some lending platforms prevented customers from withdrawing assets.
Gensler was one of the most vocal regulators who called for greater oversight of cryptocurrencies and urged platforms to discuss whether they should register with their agency.
“By getting that envelope of market integrity, a rulebook in an exchange will really help the public,” he added. “If this industry is going to take any path forward, it will generate greater confidence in these markets.”
But a bipartisan bill introduced by U.S. Senators Kirsten Gillibrand and Cynthia Lummis proposed a cryptographic regulatory framework that would extend the CFTC’s powers, based on the assumption that most digital assets look like commodities rather than securities.
The agency has traditionally focused on commodity derivatives, such as futures and options, rather than the commodities themselves.
Rostin Behnam, who was named CFTC president in January, told the FT earlier this year that there could be “hundreds if not thousands” of tokens that qualify as commodities, including bitcoins and ether.
Regulating cash crypto markets “could be a natural fit for us,” he said. The idea of “that we are not suitable I think is a bit misaligned,” he added.
“Markets are markets, whether they are derivatives, stocks or fixed income,” Behnam said. “There is always a natural relationship between… Derivatives in general and cash markets.”
Both he and Gensler declined to comment on whether expanding the CFTC’s jurisdiction over cryptography would generate friction with the SEC or cause confusion.
Behnam said the legislation “would go a long way in clarifying such a delicate and difficult issue about which currencies are commodities and which are securities.”
Gillibrand and Lummis ’bill did a“ very good job ”in distinguishing between titles and commodity tokens, Behnam said at a conference earlier this month.
At an event a few days later, Gensler failed to comment on the bill, but warned against undermining existing protections in a “$ 100 million capital market.”
He added: “We don’t want ‘stock exchanges or mutual funds,’ inadvertently, at a stroke, let’s say ‘You know what? I want to be … out of this scheme’ which I think has been a great benefit to investors and economic growth in recent 90 years “.