Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
Commissioners of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have come together to discuss 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 investment products.
Also read:Â Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations
CFTC Regulating Bitcoin Futures
At a Bipartisan Policy Center event entitled âThe Year Ahead for Capital Marketsâ last week, SEC Commissioner Hester Peirce and CFTC Commissioner Brian Quintenz discussed their agenciesâ approaches to regulating crypto investment products.
Explaining his agencyâs oversight of bitcoin futures contracts listed by Cboe Futures Exchange and CME Group, Quintenz stated:
We have a process in the Commodity Exchange Act that allows the exchanges to self-certify a contract if they believe it meets the requirements of the Act.
He elaborated that the CFTC has a âreview period in which we can say no we disagree with you and hereâs why, but if we donât disagree, [then] they have the opportunity to go ahead and self-certify that contract.â He noted that both of the above âexchanges pursue that self-certification [route] so these contracts get listed without our approval but also without our disapproval.â
The commissioner also revealed, âOur jurisdiction over those contracts requires that they not be readily susceptible to manipulation ⊠in any capacity,â adding that there is also the âquestion of how easily can we discover it and usually itâs very easily.â
SEC Reluctant to Approve Bitcoin ETF
SEC Commissioner Peirce, sometimes known as âcrypto momâ within the Bitcoin community, said that âAt the SEC weâve been unwilling to ⊠sign off on a bitcoin ETF, an exchange-traded product based on bitcoin,â voicing:
My concern about our approach in that area is it looks a little bit like a merit-based approach judging the underlying bitcoin markets.
Contradicting her agencyâs view that bitcoin markets are not regulated enough, Peirce argued that âthere are lots of markets that arenât regulated but we nevertheless build products on top of them.â She concluded, âI think we have to be very careful with that kind of reasoning.â
Her statement echoes a similar one she made in August last year when she explained that the SEC âlooked through to the underlying asset [bitcoin] ⊠and raised some concerns about the market for that underlying product.â Crypto mom believes that âby 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.â
Commodities vs. Securities
Quintenz proceeded to describe significant differences between securities and commodities, stating:
We only have fraud and enforcement jurisdiction over the commodity space. Our oversight jurisdiction is over the commodity derivatives space, so the trading of commodities themselves like things like Ebay we donât have any type of oversight over that.
He emphasized that having no oversight is ânot necessarily a bad thingâ if trading platforms âcan implement a free-market approachâ to solve problems such as market manipulation. âBecause of our lack of statutory oversight capability, Iâve 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.â
In addition, he clarified that these platforms can set standards themselves âhowever they view is appropriate ⊠from conflicts of interest, business conduct, insider trading, redemptions, custody, liquidityâŠâ
SEC and CFTC Open to Collaborating
Peirce was also asked whether she thought that âthe SEC and other regulators generally take a too-restrictive approach to cryptocurrenciesâ and whether âregulation in this area [is] burdensome.â She replied that restrictive may not be the word she would use, but rather it is âtoo confusing.â She proceeded to say that this is âan area where I think Brian and I are interested in working together,â elaborating:
Thereâre questions about where your jurisdiction ends and ours begins and again we donât want to have overlap there so you know my main concern has been that I think we need to do a better job providing guidance.
What do you think of the differences between how the CFTC and SEC approach bitcoin investment products? Let us know in the comments section below.
Images courtesy of Shutterstock.
Need to calculate your bitcoin holdings? Check our tools section.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.