Commissioners of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have come collectively to focus on their regulatory approaches to bitcoin futures contracts and bitcoin exchange-traded funds (ETFs). The two regulators are also open to collaborating on their oversight of crypto funding merchandise.
CFTC Regulating Bitcoin Futures
At a Bipartisan Policy Center occasion entitled “The Year Ahead for Capital Markets” final week, SEC Commissioner Hester Peirce and CFTC Commissioner Brian Quintenz mentioned their businesses’ approaches to regulating crypto funding merchandise.
Explaining his company’s oversight of bitcoin futures contracts listed by Cboe Futures Exchange and CME Group, Quintenz said:
We have a course of within the Commodity Exchange Act that enables the exchanges to self-certify a contract in the event that they consider it meets the necessities of the Act.
He elaborated that the CFTC has a “review period in which we can say no we disagree with you and here’s why, but if we don’t disagree, [then] they have the opportunity to go ahead and self-certify that contract.” He famous that each of the above “exchanges pursue that self-certification [route] so these contracts get listed without our approval but also without our disapproval.”
The commissioner also revealed, “Our jurisdiction over those contracts requires that they not be readily susceptible to manipulation … in any capacity,” adding that there is also the “question of how easily can we discover it and usually it’s very easily.”
SEC Reluctant to Approve Bitcoin ETF
SEC Commissioner Peirce, typically referred to as “crypto mom” throughout the Bitscoins.netmunity, stated that “At the SEC we’ve been unwilling to … sign off on a bitcoin ETF, an exchange-traded product based on bitcoin,” voicing:
My concern about our strategy in that space is it appears a bit bit like a merit-based strategy judging the underlying bitcoin markets.
Contradicting her company’s view that bitcoin markets should not regulated sufficient, Peirce argued that “there are lots of markets that aren’t regulated but we nevertheless build products on top of them.” She concluded, “I think we have to be very careful with that kind of reasoning.”
Her assertion echoes an analogous one she made in August final 12 months when she defined that the SEC “looked through to the underlying asset [bitcoin] … and raised some concerns about the market for that underlying product.” Crypto mother believes that “by doing that they went beyond what the statute allows us to do and we should have really focused on the market where the exchange-traded product would trade as opposed to focusing on the underlying bitcoin markets.”
Commodities vs. Securities
Quintenz proceeded to describe important variations between securities and commodities, stating:
We solely have fraud and enforcement jurisdiction over the commodity house. Our oversight jurisdiction is over the commodity derivatives house, so the buying and selling of commodities themselves like issues like Ebay we don’t have any sort of oversight over that.
He emphasised that having no oversight is “not necessarily a bad thing” if buying and selling platforms “can implement a free-market approach” to resolve issues equivalent to market manipulation. “Because of our lack of statutory oversight capability, I’ve suggested that these platforms come together to form some type of self-regulatory structure where they can discuss, agree to, implement, and hopefully examine or audit themselves.”
In addition, he clarified that these platforms can set requirements themselves “however they view is appropriate … from conflicts of interest, business conduct, insider trading, redemptions, custody, liquidity…”
SEC and CFTC Open to Collaborating
Peirce was also requested whether or not she thought that “the SEC and other regulators generally take a too-restrictive approach to cryptocurrencies” and whether or not “regulation in this area [is] burdensome.” She replied that restrictive might not be the phrase she would use, however fairly it’s “too confusing.” She proceeded to say that that is “an area where I think Brian and I are interested in working together,” elaborating:
There [are] questions on the place your jurisdiction ends and ours begins and once more we don’t need to have overlap there so you understand my foremost concern has been that I believe we want to do a greater job offering steerage.
What do you consider the variations between how the CFTC and SEC strategy bitcoin funding merchandise? Let us know within the comments part below.
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