Wednesday, September 28

CFTC Commissioner Says Agency Has Broad Enforcement Authority Over Crypto Derivatives



Dawn Stump, one of four commissioners currently serving on the Commodity Futures Trading Commission, or CFTC, has released a statement clarifying the agency’s authority regarding digital assets.

In a statement Monday, Stump said The CFTC is empowered with regulatory and enforcement authority for commodities. It did not specifically say that digital assets were cash-like products in the eyes of the regulator, but “even if a digital asset is a commodity, it is not regulated by the CFTC.” However, according to the commissioner, the agency is in its power to regulate derivatives on digital assets, “such as futures contracts on Bitcoin and Ether that are listed on various exchanges regulated by the CFTC.”

US government agencies, including the CFTC, the Securities and Exchange Commission, or SEC, and the Financial Crimes Enforcement Network, or FinCEN, are largely responsible for handling regulation and enforcement of assets. digital in the country. However, each has different jurisdictional claims regarding cryptocurrencies, often leading to confusion for companies trying to operate within the law.

According to the commissioner, the CFTC should analyze a digital asset that is already considered a security and therefore will fall under the regulatory umbrella of the SEC, to determine where the agency’s regulatory authority for a derivative product would be located for that same. draft. However, he clarified that the CFTC had the authority to enforce the financial products that it currently regulates.

“A trading platform that offers derivatives on digital assets to US persons without registering, or in violation of CFTC trading rules, is subject to the enforcement authority of the CFTC,” Stump said. “That was the case in the recent CFTC enforcement action against BitMEX, and the CFTC has initiated similar actions dating back to 2015.”

She added:

“To determine the regulatory authority of the CFTC with respect to a digital asset, do not ask if the digital asset is a commodity or a security; ask if it is a futures contract or other derivative product.”

In BitMEX’s case, the crypto derivatives exchange agreed to pay $ 100 million as part of an agreement with the CFTC and FinCEN. However, the regulatory agency is also investigating Binance Holdings Limited for possible derivative transactions made by US-based clients, and previously filed charges against the Laino Group for soliciting investors in Bitcoin (BTC), Ether (ETH), and Litecoin (LTC). ) futures trading without proper registration.

Related: Crypto-friendly CFTC commissioner Brian Quintenz plans to resign

While Stump has taken a position that appears to relegate many cryptocurrencies to SEC regulation and enforcement, she is only one of four voices, usually six, on the panel that regulates commodities. Commissioner Brian Quintenz, a seemingly pro-crypto advocate at the CFTC, reportedly plans to resign at the end of August.