Crypto cash markets are “beyond our expertise”, says CFTC Commissioner Stump

Rick Steves

The CFTC Commissioner suspects the root of some of the confusion as to the CFTC’s role in the digital asset space is the regulator’s role in the cash markets. 

CFTC Commissioner Dawn Stump has addressed the confusion regarding the role of regulators in the digital asset space again.

Ms. Stump has been making efforts to explain the regulators’ scope as something that must be dealt with before government agencies engage in a jurisdictional power-grab.

“Until we remedy that confusion, we cannot have an honest conversation about whether any agency needs new authorities. And only then can informed stakeholders contribute to designing a workable regulatory structure”.

The Commissioner pointed to “the persistent tendency to draw a distinction between commodities and securities” as an example of the confusion of how it all works, often stemming from “well-intentioned product developers seeking to determine if they need to face the CFTC or the Securities and Exchange Commission (SEC) in achieving proper U.S. regulatory compliance”.

“Is my product a security or is it a commodity?” is the wrong question, she stated. “As most everyone here knows, the CFTC does not regulate commodities. So, any pronouncement that an asset is a commodity should not be interpreted as a roadmap to the CFTC for regulatory oversight”, Ms. Stump continued.

“I want to be very clear that the CFTC regulates derivatives – we are specifically charged by Congress to regulate futures and swaps – many of which have commodities as their underlying assets, but we do not regulate the underlying commodities themselves”.

The SEC regulates securities and the CFTC regulates derivatives – not commodities – including some derivatives on securities.

“Complicated? Unfortunately, yes. But it is how our system is designed today, with multiple regulators involved in the oversight of assets depending on the nature and function of the specific product”.

The CFTC Commissioner suspects the root of some of the confusion as to the CFTC’s role in the digital asset space is the regulator’s role in the cash markets.

Congress provided the CFTC with this expanded enforcement authority because such fraudulent or manipulative activity in the cash markets may have an impact on the derivatives markets, she explained.

“Given the confusion that exists, I believe we must consistently clarify that this broader enforcement authority does not suggest that we are conducting day-to-day regulatory oversight in these cash or spot crypto markets. Failing to be clear on this point gives the public a false sense of security and leaves those seeking a regulatory home perplexed”.

Besides the need to stop the confusion and “silly distinctions between commodities and securities”, the CFTC should focus on what it does best, regulating the infrastructure that supports futures and swaps markets.

“Meanwhile, a regime already exists for regulating futures and swaps on digital assets, and we at the CFTC have for some time been applying our regime in this space”.

Before expanding the CFTC’s authority into the cash markets, Commissioner Stump called for careful consideration “to whether the market infrastructure we oversee today can logically benefit the cash markets, which have historically been beyond our expertise”.

Read this next

Metaverse Gaming NFT

DCentral Miami brings together all of Web3, NFT, DeFi, Metaverse

The world’s biggest Web3 meeting entitled DCENTRAL Miami is set to take place November 28-29, featuring a lineup of some of the biggest and most influential names in the blockchain space.

Digital Assets

Crypto ban expands across UK banks as Starling joins ‎crackdown

UK digital bank Starling has banned ‎all customer payments related to cryptocurrencies, another blow for the crypto traders ‎who recently saw a sizable number of banks deciding not to ‎finance the wobbly asset class.‎

Interviews

Markets Direct at FIA EXPO 2022: Traders know what they want from brokers

The FIA Expo 2022, one of the most prestigious events within the global derivatives trading industry, took place in Chicago on 14 & 15 November.

Interviews

FIA Expo 2022: TNS addresses public cloud limitations with hybrid infrastructure

November is the month of the FIA Expo, one of the largest futures and options conferences in the world, bringing together regulators, exchanges, software vendors, and brokers in one place: the Sheraton Grand Chicago Riverwalk. 

Retail FX

Italy’s regulator blacks out Finance CapitalFX, MFCapitalFX

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

Suspected leader of Honk Kong ramp-and-dump scam appears in court

A leader of a sophisticated ramp-and-dump scheme made his first court appearance in a Hong Kong court today, charged with market manipulation and various criminal offences. The case stems from an earlier joint operation of Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), and the local police. 

Institutional FX

Cboe’s James Arrante discusses growing demand for fixed income, FX algo

We caught up with James Arrante, senior director of FX & US treasuries product and business management at Cboe Global Markets, to uncover emerging trends in the FX and fixed income markets and learn more about the bourse operator’s recent initiatives.

Retail FX

Eurotrader acquires UK broker Petra Asset Management

Eurotrader Group has formally entered into the UK market with the acquisition of FCA-regulated broker, previously named Petra Asset Management Ltd. The new entity operates under the brand name Eurotrade Capital Ltd.

Inside View, Retail FX

The Game of Chess Continues – OPEC, China and the Oil Market

Over the past decade, the US has been complaining about the amount of power which the BRIC group, and specifically China, has on the global economy. BRIC stands for Brazil, Russia, India and China; these were the world’s fastest growing economies. Only in the past 10 months, the US has turned their attention toward OPEC due to the prices of fuel. Nevertheless, China seems to have a strong influence even over the price of crude oil.

<