CFTC vs. SEC in the backdrop of Senate’s bipartisan crypto proposal

August 04, 2022 12:51 PM AEST | By Ankit Sethi
Follow us on Google News:

Highlights

  • The CFTC and the SEC are two different regulatory agencies in the US under different legislations
  • The proposed Senate bill, which has bipartisan support, can give more powers to the CFTC
  • The SEC had recently begun insider trading proceedings against one Ishan Wahi and accomplices

What is a cryptocurrency? Is it a digital currency that uses blockchain tech, or is it like a listed stock of some company, or is it a precious commodity like gold?

No two regulators around the world seem to have an identical definition of the term cryptocurrency. A few definitions can even be in contradiction to each other. The Australian Taxation Office (ATO) has not used the word ‘commodity’ while answering the question “what are crypto assets” on its website. By contrast, under the Income Tax Act of Canada, cryptos are considered a commodity.

The definition debate aside, a new debate can erupt over which is the apt regulatory authority to oversee the cryptoverse in any jurisdiction. A bipartisan proposal in the US, if it comes to fruition, can give more powers to the CFTC than to the SEC.

CFTC vs. SEC

The Commodity Futures Trading Commission, usually dubbed the CFTC, is the regulator that focuses on the regulatory oversight of the United States’ derivative market. This includes futures contracts, swaps, options, and other complicated financial products. The legislation ruling the CFTC was enacted in 1974. The Securities and Exchange Commission (SEC) has a different mandate.

The SEC is also an independent agency, which dates back to 1934 (following the market crash of 1929) and oversees the functioning of capital markets in the US. The SEC can be understood as the agency responsible for overall fairness and transparency in the US capital market with investor protection as its primary objective.

The CFTC is a later addition to the regulatory oversight landscape in the US, and it is centered on more complex products, for example, oil futures. The SEC is much larger in personnel strength. It is always said that common regulatory interests exist between the CFTC and the SEC, which is why a memorandum of understanding exists between the two agencies to further cooperation.

CFTC crypto bill

The new bill proposes to have powers divided between the SEC and the CFTC, with more inclination towards the latter. This reflects in Bitcoin and Ethereum, the two of the biggest cryptos, coming under the CFTC purview in the event the bill becomes a reality. Cryptocurrency facilitating platforms like Coinbase and Binance would also need to register with the CFTC.

What happens in coming days is a matter of speculation as of now. However, there are murmurs that stakeholders of the crypto world would like to see more powers in the hands of the CFTC than the SEC.

Bitcoin share in total market cap

Data provided by CoinMarketCap.coms

Bottom line

Recently, the SEC initiated an insider trading proceeding against some Coinbase officials. This was followed by the agency terming one crypto platform a Ponzi scheme and charging its officials for their roles in the fraud. Will the bipartisan bill give more powers to the CFTC? How will this change the present scene? How will be cryptoassets classified and divided? All this will become clear with time.

Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.



Top ASX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK