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This week, Commodity Futures Trading Commission (CFTC) officials spoke regarding regulating cryptocurrencies, and they noted the requirement for cooperation among their agency and another powerful U.S. regulator, the Securities and Exchange Commission (SEC).
Addressing the FIA Law and Compliance conference in Washington, D.C. on Wednesday, commissioner Brian Quintenz spoke out about “an effort that is underway at both the SEC and CFTC to coordinate and harmonize regulatory oversight.” He did not focus on cryptocurrencies mainly, but he Included:
“The emphasis was on “fraud, market manipulation and disruptive trading involving virtual currency.”
Examples of recent cooperation between the SEC and CFTC include the cases against the alleged My Big Coin and CabbageTech cryptocurrency scams, according to an annotated transcript of Quintenz’s remarks. He told the audience:
“The CFTC has set up a specific task force to execute fraud in this evolving asset class, the importance of cooperating with the SEC is to ensure that differences in product nomenclature do not enable bad actors to slip through jurisdictional cracks.”
Commissioner Rostin Behnam, who spoke Thursday morning, struck a much softer tone on cryptocurrencies. He noted that CME Group and Cboe’s introduction of bitcoin futures required a “hard and fast introduction” to bitcoin and blockchain technology.
He expressed concern that cryptocurrencies could present a threat to financial stability, if not now then down the line. He urged regulators – who often find themselves “scurrying to keep pace with swift innovations” – to act before that threat appears.
Behnam acknowledged that not everything in the cryptocurrency markets is a fraud and said that policy should “reflect an understanding of FinTech and address the concerns and needs of all stakeholders.”
The commissioner was skeptical of the cryptocurrency industry’s attempt to craft its own regulations, since “their motives may be too focused on supporting industry growth.” Even so, he welcomed market participants to help craft policy:
“Let’s work together, have an honest conversation, and seek solutions that focus on an inclusive regulatory landscape.”