Experts and stakeholders in the cryptocurrency industry discussed how the SEC can best regulate digital assets, especially alongside the Commodity Futures Trading Commission, at the agency’s second Crypto Task Force roundtable April 11.
The SEC launched the Crypto Task Force in January to develop a comprehensive regulatory framework for such assets, led by Republican Commissioner Hester Peirce.
Guided by a moderator, nine panelists spoke at the April 11 roundtable, titled “Between a Block and a Hard Place: Tailoring Regulation for Crypto Trading.”
One of the ongoing questions when it comes to regulating crypto is which assets should be overseen by the SEC, and which should be overseen by the CFTC.
“I have found that the turf warfare, the infighting, the constant question of who should be regulating what has caused investor harm directly,” said Dave Lauer, co-founder of Urvin Finance, a finance-focused social platform. “And I think that's been extremely problematic, over the course of the last few years, watching regulatory agencies grapple with crypto, whether they're securities or commodities.”
Lauer added that “regardless of whether something falls under the purview of the SEC or the CFTC, there's so many interlinkages and so much potential crossover that it's incumbent for these two agencies to work very closely together.”
Last May, the House passed a bill known as the Financial Innovation and Technology for the 21st Century Act, or FIT 21 Act, that would split jurisdiction of digital asset regulation so the CFTC would gain new authority over the digital commodities market, while the SEC would oversee the digital securities market. The bill also called on the SEC and CFTC to propose joint rulemakings on digital assets and would allow digital asset intermediaries to dually register with the agencies. However, the bill never reached a vote in the Senate.
Republican committee leaders have said they’re looking to pass a revised version of that legislation this Congress.
Richard Johnson, CEO and founder of Texture Capital, a broker-dealer focused on the tokenization of securities, said April 11 that “I think we need to stop pretending that it makes sense for there to be two separate regulatory agencies,” and suggested the SEC and CFTC should be merged.
“We're not going to solve that today, but when we make new rules, let's not exacerbate this silly separation that we have,” Johnson contended.
Ultimately, even without crypto legislation, “I think that the SEC can do a lot with guidance to bring disclosure standards and registration standards to the point where you can start to get things registered,” Lauer said.
