Dawn Stump, one of four current commissioners of the Commodity Futures Trading Commission, or CFTC, has issued a statement defining the agency’s power over digital assets and cryptocurrencies.
Stump said in a statement on Monday that the CFTC has both regulatory and enforcement authority over commodities. “Even if a digital asset is a commodity, it is not controlled by the CFTC,” she said, without specifying that digital assets were cash-like commodities in the eyes of the regulatory organization.
The agency, however, is within its authority to oversee digital asset derivatives, such as “futures contracts on Bitcoin and Ether available for trade on multiple CFTC-regulated exchanges,” according to the commissioner.
The CFTC, the Securities and Exchange Commission, or SEC, and the Financial Crimes Enforcement Network, or FinCEN, are primarily in charge of digital asset regulation and enforcement in the United States.
However, each has its own jurisdictional claims when it comes to cryptocurrency, which can be confusing for businesses trying to stay inside the law.
According to the commissioner, the CFTC should examine a digital asset that is currently classified as a security and so falls within the SEC’s regulatory umbrella to see where the agency’s regulatory authority for a derivatives product for that same project lies.
She did clarify, however, that the CFTC has enforcement jurisdiction over the financial instruments it already monitors.
“A trading platform that provides digital asset derivatives to U.S. individuals without registering or in contravention of CFTC trading rules is subject to CFTC enforcement authority,” Stump added.
“That was the case in the CFTC’s recent enforcement action against BitMEX, and the CFTC has brought similar enforcement actions since 2015.”
She continued, “
“To determine the CFTC’s regulatory authority with respect to a digital asset, ask not whether the digital asset is a commodity or a security — ask whether a futures contract or other derivatives product is involved.”
In the case of BitMEX, the crypto derivatives exchange agreed to pay $100 million to the CFTC and FinCEN as part of a settlement.
However, the SEC is apparently investigating Binance Holdings Limited for probable derivatives trades done by U.S.-based customers, and the Laino Group was previously charged with soliciting investors for Bitcoin (BTC), Ether (ETH), and Litecoin (LTC) futures trading without proper registration.
While Stump has taken a position that appears to relegate many cryptocurrencies to SEC regulation and enforcement, she is only one of four voices on the panel that regulates commodities, which usually has six.
Commissioner Brian Quintenz, who appears to be a pro-crypto supporter at the CFTC, is expected to resign at the end of August.
