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September 8, 2022

Gary Gensler Wants CFTC To Be in Charge of Bitcoin Regulation

Today, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), spoke at an industry conference where he voiced his support for giving the Commodity Futures Trading Commission (CFTC) authority to “oversee and regulate crypto nonsecurity tokens and associated intermediaries.”

Gensler emphasized that if Congress gives the CFTC primary control of cryptocurrency, his own federal agency should not be disregarded.

“Let us be certain that we do not accidentally undercut the securities regulations that underpin the $100 trillion capital markets,” he added. “Our capital markets are the envy of the world because of the securities legislation.”

There have been several suggestions, both from the crypto sector and from Washington, to transfer regulation of the crypto business to the CFTC, which currently only has the authority to oversee derivatives.

Although Gensler has previously said that Bitcoin is a commodity, not a security, many think he is looking for a method to put Ethereum, the world’s second-largest cryptocurrency by market capitalization, under SEC oversight.

After the news surfaced, cryptocurrency lawyer Jake Chervinsky turned to Twitter to claim that Gensler still had Ethereum in his sights.

In a letter to the House and Senate Agriculture Committees in February, CFTC Chairman Rostin Behnman argued for extending his agency’s power to encompass cryptocurrency.

He said that the CFTC was best placed to safeguard consumers from market dangers.

A bipartisan group of legislators filed legislation in April to regulate cryptocurrency innovators, dealers, and exchanges. The Digital Commodity Exchange Act they propose would give the CFTC direct jurisdiction over exchanges and nonsecurity cryptocurrencies.

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Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) proposed the Responsible Financial Innovation Act in June.

Lummis talked with Decrypt at the time and sketched out her proposed structure, in which the CFTC manages most cryptocurrencies as commodities and the SEC regulates financial products derived from them, as well as those tokens that are closer to securities in law.

The CFTC said in July that it will establish a new digital innovation office and staff it with industry professionals in order to obtain a better knowledge of the business in preparation for its position as a regulator.

A month later, the Senate Agriculture Committee presented the Digital Commodities Consumer Protection Act (DCCPA). It suggests that the CFTC be given “exclusive control” over “digital commodities.”

The DCCPA also requires digital commodity brokers, custodians, dealers, and trading facilities to register with the CFTC or face fines.