Disagreements among US politicians and agency chiefs over the appropriate regulation of cryptocurrencies has intensified as the crypto market experiences a downturn. In a recent Bloomberg Podcast called “Odd Lots”, Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam shared his view on crypto rules. Topics discussed included what constitutes a security or a commodity, market structure questions, new types of betting markets, and other matters currently facing the CFTC.
One of the major issues for regulators is determining whether cryptocurrencies should be classified as securities or commodities. Behnam acknowledges that there is no easy answer to this question and that the CFTC is working collaboratively with other agencies to develop a cohesive regulatory framework to guide operations.
Behnam emphasised the importance of protecting US customers in the digital asset space during his appearance on Bloomberg’s Odd Lots podcast. As opposed to absolving digital assets from regulation due to their decentralised nature, he believes the focus should be on what U.S. customers are being offered, exposed to, and who is behind the entities offering those products.
The CFTC Chair believes that US law already covers almost all digital assets and that legal precedent is the driving force behind the regulatory approach taken by the CFTC. Applying existing laws and regulations to the digital asset space helps to promote investor confidence and protect against malicious activities.
While digital assets have many characteristics similar to traditional financial assets, differences demand a unique regulatory approach. Behnam highlights the challenge of determining whether a digital asset should be classified as a security or a commodity. Initially, a new token may involve the pooling of capital to start a project, making it look like a security. However, as the token becomes more decentralised, it may flip from being a security to being a commodity.
Behnam believes that regulators must recognise the unique characteristics of digital assets and adopt a principles-based approach to regulation to promote innovation while protecting investors and maintaining market stability.
About the author - J-S Tremblay
I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...
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