The Commissioner of the Commodity Futures Trading Commission (CFTC), Dawn DeBerry Stump, has addressed a widespread “misunderstanding about U.S. regulatory delineations,” which suggests that the agency is responsible for directly regulating cryptocurrencies. “There has often been a grossly inaccurate oversimplification offered which suggests [cryptocurrencies] are either securities regulated by the Securities and Exchange Commission or commodities regulated by the Commodity Futures Trading Commission,” Stump said.
The prevalence of this misunderstanding about U.S. regulatory delineations requires correction.
“The prevalence of this misunderstanding about U.S. regulatory delineations has grown to the point that I believe requires correction,” the CFTC commissioner wrote. According to a presentation published on Monday, the definition of a “commodity” provided by the Commodity Exchange Act (CEA) is quite broad, so classifying a certain cryptocurrency as such would be “unremarkable” today. However, even if a cryptocurrency or a digital asset is officially deemed a commodity, this still doesn’t mean that the CFTC is responsible for regulating it. CFTC only oversees futures, swaps, and other derivatives based on commodities.
What CFTC can and can not regulate?
The CFTC can not regulate commodities that are directly traded on cash markets. However, the financial regulator will have to step in when it comes to derivatives that are based on these commodities. “For a number of years, the CFTC has aggressively used its broader ENFORCEMENT AUTHORITY to deter manipulation and fraud involving cash digital assets, even though it does not regulate them,” Stump further explained. “Because this distinguishing point is absent from the considerable number of CFTC enforcement-related press releases, it may not be well-understood (to the detriment of the investing public),” she concluded. U.S. financial regulators are looking to regulate the crypto industry more fiercely as the market continues to gain more and more mainstream exposure.