SEC Vs. CFTC fight over crypto market regulation, What are your thoughts?

[Flexystar]

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has reiterated that most crypto tokens are securities, emphasizing that “the law is clear on this.” However, the Commodity Futures Trading Commission (CFTC) has asked Congress for authority over crypto spot markets and several bills have been introduced in Congress this year to provide the CFTC with the necessary authority.

SEC Chairman Gary Gensler on Crypto Regulation
The issue of which federal agency should regulate the crypto market has gained much attention recently. While the chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has said that the majority of crypto tokens are securities and should fall under the purview of his agency, many people and lawmakers believe that it should be the Commodity Futures Trading Commission (CFTC) that regulates the crypto sector. Moreover, three bills have been introduced in Congress this year to make the CFTC the regulator of the crypto markets.

In an interview with CNBC Monday, Gensler responded to a question about who should regulate the crypto sector. The SEC chief explained:

Our agency is an agency that oversees this basic bargain. When a group of entrepreneurs is raising money from the public and the public is anticipating a profit, they need disclosure — full, fair, and truthful disclosure, and that’s the core bargain in our capital markets.

The SEC chairman continued: “You get to take the risk but the person raising money or the persons raising money has to disclose various information to you. That’s how our capital markets work best, and the SEC is very good at this and that’s what we do.” He emphasized:

The law is clear on this. I believe based on the facts and circumstances, most of these tokens are securities.

On Monday, at the Financial Stability Oversight Council (FSOC) meeting, presided by Treasury Secretary Janet Yellen, Gensler reiterated: “Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. Offers and sales of these crypto security tokens are covered by the securities laws. Given that most crypto tokens are securities, it follows that many crypto intermediaries are transacting in securities and have to register with the Securities and Exchange Commission in some capacity.”

Regarding the SEC collaborating with the CFTC, Gensler stressed:

To the extent that crypto intermediaries may need to one day register with both the SEC and the Commodity Futures Trading Commission (CFTC), I would note we currently have dual registrants in the broker-dealer space and in the fund advisory space.

Meanwhile, the CFTC has asked Congress for authority over the crypto cash market. CFTC Chairman Rostin Behnam explained last week that since the CFTC is a derivatives regulator, it does not currently oversee cash markets. Therefore, he has asked Congress for “cash authorities, so that we can go in the bitcoin cash market, the ether cash market, and the other digital commodity token [markets],” the CFTC chief explained last week.

He also said that the SEC and CFTC will have to “figure that out legislatively” because crypto is a new asset class. “There are different components and characteristics of this asset class as opposed to traditional asset classes,” Behnam said, adding: “We have to rely on 70-year-old case law to determine what’s a security, what’s a commodity.”

Source


Apparanetly it seems we have on going war over "who will control the crypto currency market" in between SEC and CFTC.
SEC:  Security Exchange Comission
CFTC: Commodity Futures Trading Commission

According to SEC, they believe that and challenged it, many coins/tokens available on the crypto space are nothing but the securities! This means according to Gensler who is Chairman at SEC, thinks his agency should be having full control over the crypto markets.

However, on the hand, Commodity Futures Trading Commission is the committee which was formed this year so that they can regulate the entire crypto market. According to the lawmakers, since CFTC is already in place and made for crypto market itself then why SEC should be having any control of it?

SEC Chairman's statement mentions:



This was counter proposed by CFTC with the request towards Congress that CFTC should be given authority over Cash Market. By cash market they mean: Bitcoin Cash, Ether Cash and Other Coins market cash.

This way they control the crypto market.

However they think, SEC and CFTC "could" work together by finding out some legislation in the middle.


Does this gives you feeling that Bitcoin / Crypto market is being dragged into the complicated control by Governments?

Whether it's SEC or CFTC, they are literally ignoring the fact that crypto user like you and me is really into it because of privacy, freedom of banking and unlimited access.

However, this is started to feel like intrusion of the same freedom now!

[hd49728]

Let they do their works and make noise for cryptocurrency industry. If after making noise, after all they accept cryptocurrency at more massively scale, they are doing something free and good for crypto.

It is better than any advertisement, because noise from SEC and CTFC should be very big than any advertisement campaign or any propaganda.

If they want to restrict crypto entirely, they should and can do this years ago. They don't have to let this industry growing to today scale.

[theskillzdatklls]

The SEC is a criminal organization that is violating their own set of laws to get as much power out of their agency as possible.

The absolute best thing you can say about them, which is next to nothing, is that they have gone after $LBC and $XRP in major lawsuits the past few years while... I don't know, missing ones like Bitconnect, Terra/Luna or the plethora of actual 100% scams out there.

[Rruchi man]

However they think, SEC and CFTC "could" work together by finding out some legislation in the middle.

I think it is very possible, they do not have to make it messy about who has control, they can both work together without hassles.

Does this gives you feeling that Bitcoin / Crypto market is being dragged into the complicated control by Governments?

The SEC has been functioning mainly to protect Investors from pump and dump schemes and maintain a safe market for investors. As crypto develops further we might see extended functions that they may need to perform for regulatory purposes under the government, and to think of that as possible makes it a bit scary.

[NotATether]

Does this gives you feeling that Bitcoin / Crypto market is being dragged into the complicated control by Governments?

.

No. Because the more bickering that's done on a high level between government agencies, the less useful work that is being done regarding the problem. So I suspect that crypto markets aren't going to get into any intenser scrutiny from either agency until one stops stepping on the toes of the other and stops opposing their respective legislations. Expect the status quo to be like this for at least another two years.

[yazher]

The SEC is a criminal organization that is violating their own set of laws to get as much power out of their agency as possible.

The absolute best thing you can say about them, which is next to nothing, is that they have gone after $LBC and $XRP in major lawsuits the past few years while... I don't know, missing ones like Bitconnect, Terra/Luna or the plethora of actual 100% scams out there.

I totally agree, they should really put some real pressure on those obvious scam coins rather than investigating the projects that are truly legit and putting some strict regulations against them. They are really making it hard for everyone because these years they always pop out in most of the topics concerning cryptocurrencies as if they have total control of the guys that have centralized coins. They should really make real investigations and put in their place the scam projects that are the main problem of the crypto market today.

[Dave1]

I don't think there is going to be war or fight over crypto regulations, at some point they will have to work together to clear everything as far are crypto goes.

Bottom line: they like to protect their consumers, that's is.

So we will see, maybe both agencies will have their own mandate but anyhow, crypto have been in their radar already and we crypto enthusiast are all aware of it by now. So let them do their job, and we will be careful not to violate any.

[avikz]

Ideally none should regulate the crypto market in US. If it has to be regulated, a new governing body needs to be form where they can have representatives from both SEC and CFTC. Cryptocurrency doesn't fall under the purview of SEC or CFTC. Also with their own set of old regulations, they will do more harm rather good in crypto market.

It must be a new body or no one else! Crypto is neither a security nor a commodity.

[goldkingcoiner]

What are my thoughts on the matter? My thought is that Bitcoin cannot be regulated and therefore its a meaningless fight over who will attempt and fail to regulate cryptocurrencies next.

As long as we are free to hand each other money anonymously, without the government keeping a digital eye on each transaction, there will be no real way to regulate the crypto market. Especially not Bitcoin. So their only choice is to attack the centralized end points like service providers. And there still exist service providers who wish to do their business anonymously. We can see drug dark markets using I2P or TOR as a slightly distasteful example of this. But the proof of concept is there.

So who cares what the regulators think? Bitcoin is unkillable and uncontrollable.

[bittraffic]

Ideally none should regulate the crypto market in US. If it has to be regulated, a new governing body needs to be form where they can have representatives from both SEC and CFTC. Cryptocurrency doesn't fall under the purview of SEC or CFTC. Also with their own set of old regulations, they will do more harm rather good in crypto market.

It must be a new body or no one else! Crypto is neither a security nor a commodity.

I'm sure they have learned everything about crypto, Gensler is one of BTC fan before he was hired by SEC. Many of us thought he would actually make a fair regulation for crypto but seem the guy is paid to destroy instead.

We're to know we have to be under a governing body to move on to be adopted everywhere. But because the government had created a lot of agencies to deal with when it comes to finance regulation, crypto is going to be rocked. FDIC has yet not come into the picture yet.

[Gyfts]

If government agencies fighting for control over the regulation of a financial market doesn't scare you, I'm not sure what does.

Realistically it doesn't matter what agency is responsible for crypto regulation, the bureaucratic red tape is impenetrable. SEC is already dabbling in crypto regulations so it seems redundant to have even more agencies request Congress that they have oversight. Seems to me the consumer suffers by having to jump through so many hoops in order to be compliant with regulations. The government won't hesitate to sanction you financially if you commit even the slightest violation, so it isn't in the interest of the consumer to have agencies fighting over one another for oversight. Not that the government would care, obviously. They have little concern for the crypto space, and it's within their interest that the scene die.

[FanEagle]

SEC could have actually taken a risk and deal with crypto themselves, it would have made sense because they do care about these stuff in stock market, so it wouldn't be a too much of a big stretch in the long run. But at the end of the day there is a good chance that they will fail to take a look at it because now there is CFTC and if that wasn't created than SEC would have been able to take a look at it.

Now, it's too late and they will probably just not handle it, because why would they create CFTC if they would just push it to SEC all over again, there wouldn't be a purpose for it, and wouldn't make any sense at all in the long run at all.

[justdimin]

However they think, SEC and CFTC "could" work together by finding out some legislation in the middle.

I think it is very possible, they do not have to make it messy about who has control, they can both work together without hassles.

Does this gives you feeling that Bitcoin / Crypto market is being dragged into the complicated control by Governments?

The SEC has been functioning mainly to protect Investors from pump and dump schemes and maintain a safe market for investors. As crypto develops further we might see extended functions that they may need to perform for regulatory purposes under the government, and to think of that as possible makes it a bit scary.

I do not think that they could both work together in that sense, they have to pick either or each other and can't really make it that much well. This is why I am going to assume that SEC will end up trying to power arm the newly founded CFTC on which of the things they could check because they are just crypto, and which of them SEC will take care because it became a securities.

Like just to give an example, bitcoin is a coin and CFTC can take a look at things regarding that, but XRP is clearly a securities, no doubt about that at all and SEC should take care of them. These type of differences will happen, but that's not working together, it's still separate working but separating the coins as well.

[cryptomaniac_xxx]

Lol, let them bicker, doesn't really matter, the mandate will be the same from either body. But it shows that they are really series of creating a regulations for crypto in general. Although one might not be surprised since even the world body is also into crypto since 2017-2018 era. The question is what kind of regulations that either agencies will implement that will push to us again whether to continue with our love crypto or not.

[Hypnosis00]

I can't speak which among them should take control of crypto but I think the SEC should delegate CFTC to make their job and do it. Though I was not totally in favor to have this crypto regulation, however, as the growth of scams and fake projects continues, I think it needs to have this thing in order to minimize them. SEC and CFTC should be able to communicate with each other and I don't think they need to argue with each other unless they are seeking something important or valuable.

[franky1]

the debate is over different types of crypto

crypto that has one network utility. where the crypto is not used as a mainnet backed coin to then produce pegged altnets. is to be SEC controlled

however because a commodity is a product used to create other products.
the crypto's that have a mainnet that peg altnets(produce other tokens)
are to be considered as commodity

here is the thing though. the SEC has limited power and jurisdiction. they can only audit, policy create and monitor businesses involved in the exchange/swap markets of the asset

however CFTC can get more involved. much like they allow the EPA to get involved in the quota and inspections of farms/refineries/mining.
yep when governments start to put regulations of farmers about how much cattle/yield they can grow. what feed/fertiliser/how much land a farmer can have. etc.. you then start to see how the CFTC can start controlling the mining reward amounts, transactions counts, and even the mining method

we seen this in ethereum because ethereum was adopted under the CFTC more so than the SEC

having bitcoin controlled by CFTC policy will cause alot more issues to arrise

[CryptSafe]

I see this as a battle for supremacy for who will control the cypto industry. I have no doubt as they have foreseen the industry to be the largest in time to-come so hence the strong contention between both organisations. This is only doing more good as the are making cypto more popular and adoption spreading wide across like fire.

As we all know, only valuables are been sort after. This is just one amongst the many indication that cryptocurrencies has come to stay.  As an organisation with the cooperate responsibilities of regulation cryptocurrency, SEC and  CFTC should be able to resolve amicably with division of labour as regards crypto regulation instead of arguing who takes over the regulation of activities in the crypto space. It is true scams and fraud do take place in the crypto and  believe these are amongst the numerous reasons why they are in contention who oversees the activities and regulation.

The point I am trying to make here is that both the CFTC and SEC should harmonize and  resolve to a concrete term.

[buwaytress]

here is the thing though. the SEC has limited power and jurisdiction. they can only audit, policy create and monitor businesses involved in the exchange/swap markets of the asset

however CFTC can get more involved. much like they allow the EPA to get involved in the quota and inspections of farms/refineries/mining.
yep when governments start to put regulations of farmers about how much cattle/yield they can grow. what feed/fertiliser/how much land a farmer can have. etc.. you then start to see how the CFTC can start controlling the mining reward amounts, transactions counts, and even the mining method

Was going to respond to say something in this line of thought but you were quicker. This is what I'd thought elsewhere before too -- SEC with limited powers, although I do believe you miss out something really important, that they also have powers of enforcement, which means they can and do go after what they deem as crime (I wonder if it's even more rabid/frequent than CFTC, as media suggests).

This crypto fight is a turf war that's been brewing since early year too so it might drag on a bit before resolution.

[fuguebtc]

What are my thoughts on the matter? My thought is that Bitcoin cannot be regulated and therefore its a meaningless fight over who will attempt and fail to regulate cryptocurrencies next.

As long as we are free to hand each other money anonymously, without the government keeping a digital eye on each transaction, there will be no real way to regulate the crypto market. Especially not Bitcoin. So their only choice is to attack the centralized end points like service providers. And there still exist service providers who wish to do their business anonymously. We can see drug dark markets using I2P or TOR as a slightly distasteful example of this. But the proof of concept is there.

So who cares what the regulators think? Bitcoin is unkillable and uncontrollable.

You mean there will be no regulation affecting the market and bitcoin? I don't think so, they can't literally control bitcoin but they can make regulations and exchanges, service providers will have to follow. If you are not using an exchange and you choose P2P it is possible, but it is not safe for you because you are trying to circumvent the law, just like you take the example of criminals using I2P or TOR, you will also become a criminal if they ban P2P. I don't think everyone likes to be a tax evader or a criminal.

Whether it's the SEC or the CFTC, it doesn't matter who makes the regulation, because regulation is inevitable, I just hope the regulation is not too strict for investors.

[franky1]

Was going to respond to say something in this line of thought but you were quicker. This is what I'd thought elsewhere before too -- SEC with limited powers, although I do believe you miss out something really important, that they also have powers of enforcement, which means they can and do go after what they deem as crime (I wonder if it's even more rabid/frequent than CFTC, as media suggests).

This crypto fight is a turf war that's been brewing since early year too so it might drag on a bit before resolution.

the SEC's 'enforcement is more about the FATF (financial action task force)
which the CFTC also use when the CFTC sees something they dont like
so SEC and CFTC are both the same in the 'enforcement' aspect

Whether it's the SEC or the CFTC, it doesn't matter who makes the regulation, because regulation is inevitable, I just hope the regulation is not too strict for investors.

it actually does matter
SEC can only regulate the market makers (exchanges) and financial services

but the CFTC can touch many other businesses and users
look at all of the regulated restrictions that other commodities have to follow
take the wheat market
its not just about the price discovery markets.. its also regulations on quota's that every farmer has to abide by to not upset the market. the regulations of environmental concern like water usage, fertiliser and such
the SEC does not how powers to control anything beyond the markets. but the CFTC can do many things like call in the EPA

so the CFTC can do things like tell exchanges to de-list crypto that is not PoS, try to demand main dev sponsoring services to promote a crypto to change over to PoS or have services not able to accept/use said crypto. and yep even go after the mining farms by stopping them getting electric contracts from power companies

you will be surprised by how much CFTC can get its fingers into
in short the SEC cant really call in the EPA or handle debates, or problems regarding the environmental stuff. its not their jurisdiction.. but the CFTC has a wider jurisdiction.

..
the whole funny part is
the CFTC has had its fingers on ethereum during its PoW days but now its PoS suddenly CFTC doesnt care much and passed it onto SEC .. yet CFTC wants bitcoin now.
even though bitcoin is not as much of a commodity as ethereum.
the reasons is that under CFTC ethereum is no longer a environmental concern so any possible 'enforcements' the CFTC forwards to FATF would just from now on be market related, which the SEC can handle

yet its obvious they want to forward environmental concerns to the EPA about bitcoin and then forward that to the FATF because the SEC cant/wont do such