Timothy Massad, current CFTC Chairman, believes that closing the gap present in crypto regulation will require close cooperation with the SEC.
Massad: CFTC and SEC must work together to define clear crypto regulation
For years now we heard about how to regulate the cryptocurrency market and something that immediately presented itself as a major challenge. The lack of a regulatory framework that is clear and common to all has created some confusion, especially in defining what a cryptocurrency is and, consequently, how to deal with it.
Some think that they should be understood in the same way as securities, and others, on the other hand, believe that they should be regarded as commodities.
This has naturally led to the initiation of some legal actions by market regulators, such as the well-known lawsuit between Ripple and the SEC.
There is also an endless debate between proponents of outright decentralization and those who argue that for sustainable market development there is a need to define rules.
Certainly, the ideals that support blockchain technology as it was created should be protected. On the other hand, however, since the birth of Bitcoin to date there have been numerous scams, frauds, hacks, and, especially in the last two years, rug pulls.
Consequently, these are precisely the circumstances that call for a regulatory framework that can protect the “weaker parties,” namely consumers and investors.
Moreover, such laws must be able to support the development of the market without holding it back, as is the case when regulations become too stringent and limiting for those in the industry.
Thus, a clear conflict is being created between regulation and deregulation. Certainly, the latter has allowed exponential development over the past 14 years, but it has also left room for a too-long series of negative events.
The solution expressed by the CFTC Chairman
According to Timothy Massad, this kind of gap can be solved through the creation of a self-regulatory organization, or as it is called in English, Self-Regulatory Organization (SRO):
“There is a gap. There’s a gap with respect to regulation of what I would call the cash market for crypto assets, which are not securities.”
The idea is to combine the resources and know-how of the CFTC with those of the SEC to establish an SRO. This type of organization is typically created for the sole purpose of regulating a specific industry, and outlining standards for that industry.
Massad, during an interview with “First Mover,” a TV show hosted by CoinDesk, stated that:
“The SEC and the CFTC create a joint self-regulatory organization that they would oversee and they would pass on its rules.”
Meanwhile, the European Union gained a small head start on cryptocurrency regulation by officially approving the MiCA on June 30. This is an initial EU provision intended to pave the way for clear guidelines regarding cryptocurrency markets.