Recently, the Biden Administration took a serious step toward crypto regulations. To begin with, cryptocurrencies are a matter of national security in The US and multiple agencies are responsible to make reports to the Whitehouse regarding the upcoming crypto regulations. Initially, agencies are to analyze and research the sector and basically find out who’s jurisdiction it is to regulate these digital assets. The analysis phase will go on until the end of 2022’s third quarter. However, new information coming from CFTC Chief indicates a categorization on the horizon to deal with cryptocurrencies.
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Divided Crypto Regulations
Are they commodities, or are they securities? Tis the question that the regulators are arguing about. The Commodity Futures Trading Commission (CFTC) chair Behnam has said in a recent interview that cryptocurrencies may be divided into different categories. In order to come up with a legal framework for crypto regulations, cryptocurrencies must first find their definition.
With a recent interview, on CNBC, Behnam pointed out that the categorization can make a big difference on regulation agencies. In short, if they are commodities, then the CFTC will have oversight. If selected as securities, then the Securities and Exchange Commission (SEC) will take care of them.
“Within this fear of digital assets and the coins which make up thousands of thousands, they are naturally going to be some commodities and securities. In my view, it makes sense to sort of parse through the two and figure out where we can place each.
It’s going to be difficult because from a legislative standpoint and given the novelties of some of these coins and the technology, we have to figure out what will constitute the security under the traditional securities law and what would constitute more of a commodity so that we can regulate appropriately – given the two different legal structures.”
But, Behnam believes that Bitcoin and Ethereum are in fact commodities which makes sense. Bitcoin and Ethereum are the two largest cryptocurrencies by market cap.
“I can say for sure Bitcoin, which is the largest of the coins and has always been the largest regardless of the total market cap of the entire digital asset market capitalization, is a commodity.
Ethereum as well. I have argued this before, my predecessors said it is a commodity. There may be, in fact, hundreds, if not thousands of security coins, but there are plenty of commodity coins that I think it makes sense, as we’ve done historically, to make sure that each agency has jurisdiction over commodities and securities respectively.”
Will it Make a Difference?
We know for a fact that the SEC is a sworn enemy of all that is crypto. Although. They have not said it exactly this way, they have made quite a few remarks that supports our theory. Gary Gensler, the head of SEC has called cryptocurrencies private money from the wildcat banking era. So, if crypto regulations come from the SEC, then they wouldn’t be pleasant at all.
However, Behnam indicated that they are pretty much on the same page with the SEC on crypto regulations. So, commodities or securities, both agencies are going to be imposing the bejesus out of them crypto regulations.
“We each are trying to do what’s best and right now, and we saw this last week, a lot of people got hurt, a lot of values lost in the market and there really are no customer protections right now. We have a number of state-level regulations and oversights but in terms of market oversight, in terms of disclosures, we don’t really have much right now as it relates to traditional financial markets…
need to put forward a regulatory framework that will protect customers, make appropriate disclosures and ultimately, for those who support the industry, support its growth and maturity over the next couple of years.”
