The United States is facing challenges in establishing clear regulations for cryptocurrencies, with evident disagreements between its main regulatory bodies.
Rostin Behnam, who leads the Commodities Futures Trading Commission (CFTC), recently reaffirmed that under current laws, a majority of cryptocurrencies are classified as commodities. He pointed out there is a regulatory tug-of-war, especially between the Securities and Exchange Commission (SEC) and CFTC, on who should oversee the digital assets space.
Whose turf is this?
On CNBC’s “Squawk Box,” Behnam emphasized that current legislation treats many crypto tokens as commodities, shedding some light on their regulatory status in the U.S. He underscored the complexity of cryptocurrency regulations and called for Congressional action to clarify the situation, noting that lawmakers are striving to comprehend the intricate regulatory environment.
The U.S., along with Australia and Brazil, is a major player in the cryptocurrency field. However, the country’s unclear regulatory framework and inconsistent enforcement against crypto companies are hindering businesses in the sector.
The CFTC’s Rostin Behnam has highlighted the ongoing regulatory “turf war” within the U.S., especially between the SEC and the CFTC, over who should govern the cryptocurrency industry. This dispute has impeded the establishment of definitive guidelines for managing digital assets and the broader crypto industry.
Behnam’s stance on cryptocurrency regulation is at odds with SEC Chair Gary Gensler’s view, who believes that cryptocurrency transactions fall within the purview of securities and hence under the SEC’s regulatory domain.
SEC vs. CFTC
Regarding lobbying, from 2019 to 2023, the crypto industry in the U.S. has invested $56.44 million in lobbying, with $20.2 million spent in the current year. This spending accounts for nearly one-fifth of the total lobbying expenses on Wall Street, according to CoinGecko.
In spite of the substantial lobbying by the crypto industry, regulatory bodies like the SEC have ramped up their oversight, presenting an apparent contradiction between the industry’s clout and the intensity of regulatory examination.
This contradiction came to light after Behnam called for Congress to take a more active role in crafting regulations for cryptocurrencies. He acknowledged the successful past cooperation between the SEC and CFTC but noted the unique challenges presented by digital assets.
Dan M. Berkovitz, with his experience as the SEC General Counsel and a CFTC Commissioner, disagrees with the notion of a serious conflict between the two agencies regarding digital asset regulation.
In discussions with CryptoPotato, Berkovitz stressed the need for Congress to endow more power to oversee digital assets that are not securities. While acknowledging that jurisdictional differences can lead to disagreements, he doesn’t see them as indicative of a deep-seated “rift” between the SEC and CFTC.