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22 October 2021
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Regulation

SEC and CFTC want to better regulate the cryptocurrency market

During an event where the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) were present, the two main regulators discussed their ideas about the cryptocurrency market.

During the event, called ‘The Year Ahead for Capital Markets’, Hester Peirce of the SEC, and Brian Quintenz of the CFTC, discussed the challenges the regulators will face in 2019. One of those challenges is to regulate the crypto -market.

Hester Peirce, also known as Crypto Mom since she is a supporter of a bitcoin ETF, said during the discussion:

At the SEC we did not want to approve bitcoin ETF, an exchange-traded product based on bitcoin. My concern about our approach in that area is that it seems a bit like making our decisions based on the performance of bitcoin.

Since the market is still largely unregulated, Peirce is worried about the investment products being developed, and said “we have to be very careful about how we approach this”. Bryan Quintenz, Commissioner at the CFTC said that the regulator has a special arrangement for this:

We have a process in the Commodity Exchange Act that allows the exchanges to certify a contract themselves if they think it meets the requirements of the law.

Exchanges such as the Chicago Board Options Exchange (CBOE) and the Chicago Mercantile Exchange (CME) use this arrangement, which has been trading bitcoin securities since December 2017. The CFTC can later say that these products do not meet the set requirements and prohibit them.

After Peirce said that the current situation on the crypto market is “too confusing”, she said that “this is an area where I and Brian want to work together”. For example, according to Peirce, the most important question to be resolved is “what does the supervision of the SEC entail, and where does it begin.” In addition, she emphasized that the most important thing is that there is more clear guidance for companies.

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