CFTC Edges Closer to Becoming Primary Overseer for Crypto

According to CFTC Commissioner Summer Mersinger, U.S. policymakers are moving closer to putting the agency at the helm of crypto regulation.
The designation would expand the CFTC’s mandate and pave the way for it to regulate digital assets such as cryptocurrencies and non-fungible tokens (NFTs). Mersinger made the comments this week at a Reuters Commodities Trading USA conference in Texas.
From an industry perspective, the CFTC regulating cryptocurrencies would be a much better choice than the Securities and Exchange Commission (SEC), whose chair, Gary Gensler, thinks they are securities and should be regulated the same as stocks. He has previously referred to stablecoins as casino poker chips highlighting underlying disapproval of the industry.
Senator Backing
Many industry executives have backed a bill that U.S. Senators Cynthia Lummis and Kirsten Gillibrand put forward on June 7 to make the CFTC the industry’s primary regulator. Mersinger commented:
“You’re seeing the industry coalesce around the CFTC becoming the primary regulator.”
Nevertheless, the bill is yet to pass, but it has kicked off a Congressional discussion on which agency should regulate the crypto industry. It was reported in April that the two agencies would join forces for crypto regulation, but that seems to have fallen by the wayside.
Mersinger noted that the CFTC had started a review of its potential role over cryptocurrencies. Staff is researching the regulation of spot crypto trading markets as a starting point. “We’re still a strong regulator, but our registrants have a lot of flexibility,” she added.
That flexibility would not be there if the SEC became the industry regulator since crypto companies would need to jump through the same hoops as banks and stock brokerages to get registered and approved.
If the CFTC does become the industry watchdog, most digital assets would be treated as commodities rather than securities. Agency chief Rostin Behnam also approves of the Lummis-Gillibrand bill commenting on June 8 that:
“One of the trickiest things we’re going to have to do – and I think they address this very well – is deciphering between a commodity and security.”
Lummis met with Gary Gensler this week seeking feedback on the bill, but he has yet to comment. As reported by CryptoPotato, both agencies view Bitcoin and Ethereum as commodities, but a grey area remains for the rest of the 13,300 or so tokens listed on platforms such as CoinGecko.
A Win For The Crypto Industry
Messari founder Ryan Selkis commented that the bill might also accelerate the approval of a spot crypto exchange-traded fund (ETF) in the U.S. and remove Gensler as the current barrier.
The Lummis-Gillibrand bill would go a long way in helping advance a bitcoin spot ETF, and removing Gary Gensler as a blocker for US crypto progress.
It’s not perfect, but it’s a great starting point for comprehensive legislation.
— Ryan Selkis 📖 🖊🔑 (@twobitidiot) June 9, 2022

Galaxy Digital CEO Michael Novogratz exclaimed that the bill was “wildly positive,” giving the senators “three cheers.” “It’s shocking how many Democratic politicians I now have in the office getting up to speed and trying to determine the right stance on the crypto industry,” he said at a conference on June 8.