Who Should Regulate Bitcoin Products: The SEC or the CFTC?

[Numan467]

The SEC has decided to review its earlier approval of Nasdaq Bitcoin index options after CME Group challenged the decision. CME believes that Bitcoin is commodity and that products that are directly linked to the price of Bitcoin should be controlled by CFTC, and not the SEC. Until issue is reviewed, Nasdaq approval remains paused.

My View:

The thing that caught my eye is not the delay, it is fact that there is disagreement on who should control Bitcoin-related products. With Bitcoin increasingly entering into main financial world, such questions could be more common.
I believe rule clarity is as important as approval, personally. When multiple regulators claim control over same product, it leaves exchanges, companies and investors instate of confusion. That uncertainty can slow down innovation even in face of strong market demand.

What Do You Think?

Should Bitcoin-related financial products be regulated by the SEC or the CFTC?

Is regulatory clarity now one of the biggest challenges for Bitcoin's institutional growth?

[aoluain]

As Bitcoiners regulations dont sit comfortably with us and for a good percentage of Bitcoiners
they dont necessarily care about Bitcoin ETF's or Microstrategy's Bitcoin strategy .

"Bitcoin related financial products" are really the realm of the institutions and people who
dont necessarily want to own their own Bitcoin straight out.

Personally I couldnt care less who regulates those investment products which are based
on Bitcoin market.

[_act_]

Because bitcoin is regulated by the CFTC which is because bitcoin is a commodity, that does not mean Nasdaq Bitcoin index is a commodity. In fact, it is not a commodity and it is the work of the SEC to regulate it because it is a security.

Should Bitcoin-related financial products be regulated by the SEC or the CFTC?

SEC.

Is regulatory clarity now one of the biggest challenges for Bitcoin's institutional growth?

They are centralized, it is part of it.

[Die_empty]

For now, the line that separates the roles of the SEC and CFTC is so thin that sometimes it's invisible. Generally, when Bitcoin is classified as securities, it falls under SEC jurisdiction. So any digital asset that is seen as an investment contract is under the control of the SEC.

In any case, if assets are classified as commodities, the CFTC takes control. Bitcoin is also classified as a digital commodity similar to gold or oil. When Bitcoin services such as futures and leveraged contracts are offered, the CFTC takes control.

Industry players hope that the CLARITY Act would clarify the jurisdictional conflict that has existed between the SEC and the CFTC regarding the regulation of digital assets. For now, Nasdaq Bitcoin index options fall under the dual regulatory oversight of both agencies. Since the matter is before the court, we would have to wait for the judgment to determine which body has the power to approve Nasdaq Bitcoin options.

[Cryptomultiplier]

For now, the line that separates the roles of the SEC and CFTC is so thin that sometimes it's invisible. Generally, when Bitcoin is classified as securities, it falls under SEC jurisdiction. So any digital asset that is seen as an investment contract is under the control of the SEC.

In any case, if assets are classified as commodities, the CFTC takes control. Bitcoin is also classified as a digital commodity similar to gold or oil. When Bitcoin services such as futures and leveraged contracts are offered, the CFTC takes control.

Industry players hope that the CLARITY Act would clarify the jurisdictional conflict that has existed between the SEC and the CFTC regarding the regulation of digital assets. For now, Nasdaq Bitcoin index options fall under the dual regulatory oversight of both agencies. Since the matter is before the court, we would have to wait for the judgment to determine which body has the power to approve Nasdaq Bitcoin options.

The CFTC suits the role better as the primary regulator for direct Bitcoin's financial products and in this case, Bitcoin falls into the commodity class and should be controlled by the CFTC under the commodities exchange Act.

However, the power of the SEC is supposed to be limited to securities structures like spot ETF or options contract, but since there's no clear cut jurisdiction, the awaited judgement would have to clearly specify which body has power over the other mostly as regards approval of NASDAQ Bitcoin options.

[legiteum]

The Crypto industry is now, by far, the #1 political donor in the USA. It surpasses Big Oil, Big Pharma, and all of the others.

As such, I think the short answer to this question is:

Which one will make CoinBase and Binance more money?

 

The Clarity Act is being held up in the Senate because Democrats are demanding that politicians be banned from trading in crypto while in office, and they want that to include Trump--and Trump has vowed to veto any bill that will constrain his, um, side ventures...

The CFTC seems to be the industry's preference right now, but that's only because the CFTC is much smaller in terms of personnel, so the industry believes there will be less enforcement if it's the CFTC rather than the SEC.

Folks, as an American who has been around for a while, I can see the usual pattern playing out:

1. The industry lobbies Congress to deregulate itself to the point where anything goes.

2. Millions of average Americans get ripped off, lose their savings, etc.

3. Congress responds to the popular backlash and regulates the living shit out of said industry.

Then, after 10-20 years go by, the cycle repeats...

[Faisal2202]

Is regulatory clarity now one of the biggest challenges for Bitcoin's institutional growth?

No brother, it is not the biggest challenge ever, because the path has already been streamlined, bitcoin is already declared a commodity and the products related to commodity are under the jurisdiction of CFTC while securiites are under SEC but CFTC has a real concern with SEC that why are you handling this and how can you approve, but does the platfor did not knew where they have to file it for?

As the real product in question is option trading, where no one is buying the real bitcoin, they will trade on the price alone with some contracts, like future agreements, if you know what it is then it will be easy if not then please check it out on google first.

So the deal is occuring in dollars as no real btc is being bought maybe that's why SEC has done it and CFTC is claiming it in their jurisdiction.

[X-ray]

It should belong to CFTC, because Bitcoin happens to be classified as commodity. Why? because according to Commodity Exchange Act CFTC have exclusive jurisdiction over options of a commodity.

This is honestly a good example why we need Clarity Act, had the bill passed the bitcoin options would be under CFTC jurisdiction because even the Clarity Act will put commodity derivatives under CFTC and not SEC.

These kind of confusion is honestly not needed.

[BluebloodCXVI]

Perhaps it’s better for each regulator to just stick to what they were meant to oversee.

If it’s a commodity related bitcoin product, then the CFTC should handle it. But if it’s a security or an investment contract, then that’s the SEC’s job.

I don’t see any need to try and put every bitcoin related product under SEC especially when bitcoin has already been recognized as a commodity in different legal contexts.

Making companies answer to both regulators will only create more paperwork, delay product launches and leave people in the dark; trust me, this kind of uncertainty doesn’t help anybody.

[Cleanshit]

Since Bitcoin is being treated as a commodity, my own opinion I think Bitcoin should remain under CFTC, but as for Bitcoin products traded on the stock exchange this very is much more understandable why SEC is involved. The main issue here is lack of clear rules not which agency is in charge. Companies and investors all they need is a proper clarity so they should know what they are going to be expecting, so it doesn’t reduces unnecessary delays

[Smack That Ace]

As Bitcoiners regulations dont sit comfortably with us and for a good percentage of Bitcoiners
they dont necessarily care about Bitcoin ETF's or Microstrategy's Bitcoin strategy .

"Bitcoin related financial products" are really the realm of the institutions and people who
dont necessarily want to own their own Bitcoin straight out.

Personally I couldnt care less who regulates those investment products which are based
on Bitcoin market.

Of course, nobody wants or likes regulation. But whether we like it or not, they are unavoidable. Just like any other asset, as Bitcoin become more mainstream, involvement from regulator is inevitable. This is also the price we have to pay if we want more massive capital from institutions or traditional finance to flow into Bitcoin and push it to hundreds of thousands or even millions of dollar.

[Luzin]

The Clarity Act is being held up in the Senate because Democrats are demanding that politicians be banned from trading in crypto while in office, and they want that to include Trump--and Trump has vowed to veto any bill that will constrain his, um, side ventures...

I also discussed the issue of authority between the SEC and CFTC and the Clarity Act at the local board. What’s happening is, the purpose of this law is good because the authority will be clearer once it’s passed. But indeed, this is politics, and it seems there are pros and cons. This happens in politics, and I read a while ago that there was a revision regarding the submission of the Clarity Act draft. So there are more detailed regulations like you mentioned about government officials and ethics related to crypto.

At least there’s an addition of more than 70 pages from the initial draft plan. The additional content is related to government officials’ ethics, law enforcement, and anti-money laundering. Even the delay in passing the Clarity Act made the US Treasury Secretary criticize the Democratic Party. The Democratic Party in the Senate is seen as slowing down the Clarity Act approval, and this has become a political move that risks undermining US economic leadership.

[KiaKia]

I don't care who ever want to for me should do it, Bitcoin needs no regulation, I am not a bitcoiner like some people on here but this is my own opinion, the last thing Bitcoin needs iss some form of regulation, over what exactly?

To pip into people's Bitcoin balance? To be able to carry out some centralised mission over Bitcoin and it's holder? ETF sound good enough and those who wanted it already gotten it but now they want more..

Everything will be fine without getting involved with Bitcoin, they should leave Bitcoin alone, what needs regulation is the crypto space without Bitcoin, the shit coins and memecoins, the unqualified developers in crypto space, that's where regulations should come in.

[tiCeR]

The Crypto industry is now, by far, the #1 political donor in the USA. It surpasses Big Oil, Big Pharma, and all of the others.

As such, I think the short answer to this question is:

Which one will make CoinBase and Binance more money?

 

The Clarity Act is being held up in the Senate because Democrats are demanding that politicians be banned from trading in crypto while in office, and they want that to include Trump--and Trump has vowed to veto any bill that will constrain his, um, side ventures...

The CFTC seems to be the industry's preference right now, but that's only because the CFTC is much smaller in terms of personnel, so the industry believes there will be less enforcement if it's the CFTC rather than the SEC.

...

How would a ban on politicians trading crypto ever be enforced? Unless family members would be included in the ban, it would never be effective and even then there would be loopholes to take part in trading or purchasing equity in crypto industry infrastructure like exchanges or mining companies or whatever the hell you can do to profit whereas not being called a trader. The Democrats can try to get a few paragraphs about bans included into the Clariy Act, but what are the chances that this results in effective bans?

[Ayers]

How would a ban on politicians trading crypto ever be enforced? Unless family members would be included in the ban, it would never be effective and even then there would be loopholes to take part in trading or purchasing equity in crypto industry infrastructure like exchanges or mining companies or whatever the hell you can do to profit whereas not being called a trader. The Democrats can try to get a few paragraphs about bans included into the Clariy Act, but what are the chances that this results in effective bans?

there will always be loopholes and there will always be ways around the rule. there is no way to completely stop politician from manipulating the market or profiting from it.

overall, adding bans to the clarity act will not solve the problem completely. but it can still reduce abuses of power to some extent and provide a legal basis for taking action against those who break the rule. that is still better than letting politicians do whatever they want without facing consequences.

[legiteum]

How would a ban on politicians trading crypto ever be enforced? Unless family members would be included in the ban, it would never be effective and even then there would be loopholes to take part in trading or purchasing equity in crypto industry infrastructure like exchanges or mining companies or whatever the hell you can do to profit whereas not being called a trader. The Democrats can try to get a few paragraphs about bans included into the Clariy Act, but what are the chances that this results in effective bans?

Financial actions, especially at the investment level, require a lot of people and businesses to be involved. It's true that Trump can simply pardon himself, his family and his business associates, but he knows that this laws would severely slow things down since it's just not practical to try to figure out how to pardon potentially hundreds of people and companies--and many people would fear that they wouldn't get their pardon and go to prison because they made Trump, one of his family members, or some Republican pundit connected to Trump angry.

In short, this ban would make Trump's life more difficult, which is why he's against it. Obviously one law can't stop all criminality (no matter what kind of law and criminality we're talking about), but it would definitely have a significant effect.

As for family members and so forth, other laws like this indeed close that loophole in various ways. Again, no law, even the ones against murder, will stop all criminality, but they have effects nevertheless.

But this is an academic conversation: the Clarity Act isn't going to pass as long as Trump is in office, most likely...

[Sandra_hakeem]

The SEC has decided to review its earlier approval of Nasdaq Bitcoin index options after CME Group challenged the decision. CME believes that Bitcoin is commodity and that products that are directly linked to the price of Bitcoin should be controlled by CFTC, and not the SEC. Until issue is reviewed, Nasdaq approval remains paused.

Since the Nasdaq Bitcoin index uses tools that tracks the price of Bitcoin, and the SEC secures and serves as a financial market regulator,  I think the CME group is right about their decision to request a legal review.

My View:
The thing that caught my eye is not the delay, it is fact that there is disagreement on who should control Bitcoin-related products. With Bitcoin increasingly entering into main financial world, such questions could be more common.

The will always be disagreement when money is involved.

Is regulatory clarity now one of the biggest challenges for Bitcoin's institutional growth?

Personal, I'll say yes to some extent.

[lombok]

How would a ban on politicians trading crypto ever be enforced? Unless family members would be included in the ban, it would never be effective and even then there would be loopholes to take part in trading or purchasing equity in crypto industry infrastructure like exchanges or mining companies or whatever the hell you can do to profit whereas not being called a trader. The Democrats can try to get a few paragraphs about bans included into the Clariy Act, but what are the chances that this results in effective bans?

there will always be loopholes and there will always be ways around the rule. there is no way to completely stop politician from manipulating the market or profiting from it.

overall, adding bans to the clarity act will not solve the problem completely. but it can still reduce abuses of power to some extent and provide a legal basis for taking action against those who break the rule. that is still better than letting politicians do whatever they want without facing consequences.

Admittedly, there is no legal tool that will close all fraud loopholes area. Nevertheless, even the presence of rigid rules can be viewed as kind of deterrence, putting constraint on the arbitrariness of citizens in power. At least the presence of formal legal system makes certainty of punishment so that legally no longer are ethical offences or dealing with irregular transactions left unpunished.