Increased oversight by the US Securities and Exchange Commission (SEC) of the cryptocurrency industry has led both the community and regulators to question the US watchdog’s approach.
at recent days certificate Before the US House Committee on Agriculture, CFTC Chairman Rustin Behnam highlighted the need for congressional action to address the lack of federal regulation of the digital commodities market.
“Organize by doing” is not sustainable
Behnam stressed that bringing this volatile market out of the shadows into the regulatory fold would protect customers, ensure market flexibility and stability, and prevent the contagion of the traditional financial system.
Behnam further alleged that events over the past year have added urgency to these recommendations, with bankruptcies of several large digital asset platforms wiping out billions of dollars of client funds, and alleging that many market participants engaged in deceptive and abusive trading activity.
Moreover, Behnam believes that these tools are essential to prevent future crises and should be applied to the cryptocurrency industry. He proposes that the market be subject to similar, time-tested regulations focused on protecting customer assets, monitoring business activity, prohibiting conflicts of interest, and enforcing strict cybersecurity standards.
Furthermore, lawmakers put questions to the CFTC chairman and a panel of industry experts. During the hearing, Behnam stressed the need for more congressional powers to address crypto risks and establish clear policies.
Behnam noted that there is a “regulatory vacuum” and “gap” in regulation around digital commodity assets, and that while the CFTC and the SEC should not avoid charging entities that violate existing law, more is needed. It is the power of Congress to address these risks. He expressed concern that the current enforcement approach, which he described as “regulation through enforcement,” was not an appropriate way to control the market, adequately protect customers, or encourage innovation.
Behnam stressed the importance of congressional action to address the lack of federal regulation on the cryptocurrency market. He noted that without clear and comprehensive regulations, there is a risk of financial instability concerns as the market grows and stabilizes. Behnam stressed that the regulators’ responsibility is to protect customers, ensure market stability, and prevent contagion from the traditional financial system.
“It’s time to clear the cipher regulations”
Coinbase CEO Brian Armstrong has answered in a recent SEC complaint against the company, stating that they are proud to represent the industry in court to finally get some clarity on crypto rules. Armstrong highlighted several key points in Coinbase’s defense, including the fact that the SEC reviewed its business and allowed it to go public in 2021.
Armstrong also emphasized that there is no clear path to “in and sign up” with the SEC, which is why Coinbase rejects the vast majority of the assets they review. Armstrong noted that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have made conflicting statements, not even agreeing on what a security is and what a commodity is. This has led to confusion and uncertainty in the industry which is why the US Congress is introducing new legislation to fix the situation.
Armstrong criticized the SEC’s regulation by enforcement approach, which he believed harmed America. He stated that if Coinbase needed to take advantage of the courts to clear the matter, they would. He also confirmed that Coinbase’s lawsuit is very different from others, as the complaint against them focuses exclusively on what is or isn’t.
Despite the ongoing legal battle, Armstrong expressed confidence in the facts of Coinbase and the law and stated that they would get the job done. He encouraged the industry to keep moving forward and building, and expressed his belief that America would eventually succeed.
Featured image from iStock, chart from TradingView.com