Gensler Wants to Unite Forces With The CFTC

SEC Chair Gary Gensler asked staff to coordinate with the CFTC on ways to regulate crypto exchanges that feature both securities and non-securities. Neither this post nor any other on cryptofal.com should be taken as financial advice. It is not.

Over the past year or two now we have seen the adoption of cryptocurrencies explode around the world. According to a report by Gemini, many countries doubled their adoption year over year. These countries included India, Brazil, and Hong Kong with Brazil leading the way with a 41% adoption rate. This mainstream adoption means that regulators need to start putting out clear guidelines on how people should go about reporting their actions.

Guidelines are needed especially since crypto does not operate the same as traditional assets. If you own shares of Apple you can not send them to another person’s account like you can with crypto. This brings up an issue that some people probably experienced when filing their crypto taxes. If you received crypto from a friend’s wallet and sold it for cash you get a flagged transaction that says “no cost-basis.” Now it becomes tricky how you are going to report that and it is not just a simple google search away. This is because nobody has actual guidance on what the appropriate steps should be.

We are on our way there though as regulating bodies are doing more now than just threatening investors to pay. Gary Gensler of the SEC has suggested that both the SEC and Commodity Futures Trading Commission (CFTC) join forces to regulate crypto exchanges. Gensler said that he has asked his staff to collaborate with the CFTC to find ways to "register and regulate platforms where the trading of securities and non-securities is intertwined.” Since they both cover different ends of the securities world this could be a good way to brainstorm on how to differentiate cryptos that are or aren’t securities.

Brett Harrison, CEO FTX.us, said "I think a lot of token products out there would happily register with the SEC or the CFTC or both or neither if they knew that would get them on to exchanges in a licensed, regulated way, The problem is there's not a clear path right now." Having the two work together would really simplify the process for teams that are also looking to list their tokens for exchange. Instead of having to register with the two separately as well as other regulating bodies, this would help clear up the process so nobody gets the hammer dropped on them for doing something they were not told was wrong.

For better or worse regulation is needed in the crypto space not just because the government wants extra tax dollars but because people are getting robbed blind every day. There is no insurance like the FDIC to cover stolen funds in crypto currently. There is especially no coverage if you are using DeFi applications. Some centralized exchanges are nice enough to hold reserves from the large number of trading fees you pay to cover you in case of something though. Regulation means that the space is now legitimate and not just magic internet money and a lot more people would be willing to dive into it if they could trust these exchanges. This is the peace of mind regulation from the SEC and CFTC would bring.