Crypto Industry Should Self Regulate, Says CFTC Commissioner
Regulations can take years to develop, so why wait when you can self-regulate?
That's the message U.S. Commodity Futures Trading Commission (CFTC) commissioner Brian Quintenz delivered to the audience at the D.C. Blockchain Summit on Wednesday.
"I believe that a private cryptocurrency oversight body could bridge the gap between the status quo and future government regulatory action," he told the audience in his keynote address.
Quintenz also suggested that a cryptocurrency self-regulatory organization (SRO) could have an impact beyond the U.S. market, and could potentially take on global significance.
"I think right now everyone's trying to figure out where and how their laws apply to this space," he told CoinDesk in an interview.
"So if the community takes advantage of that time and that ambiguity there's the potential for a global framework to apply to everyone if there's enough buy-in from the community to do that, since there aren't jurisdictional questions as to which entity has to do what, or rules that necessitate a bifurcation or separate approaches to the regulation."
Numerous jurisdictional questions concerning cryptocurrencies and tokens currently face the industry, with the CFTC, the Securities and Exchange Commission and the Internal Revenue Service taking different stances on how they classify the assets.
While Quintenz remarked in the interview that "bitcoin is absolutely, clearly not a security. It is absolutely a commodity," he also said that the aforementioned agencies and others should avoid reducing the broader space to one type of product.
"In reality, it's a very broad array of innovative products that have been created," he explained, going on to say:
"Some are very simple, some are very complex, some have utility function, some have security-like features, some have payments associated with them or returns or ownership, or I'm sure some could have voting rights. You get into a very murky landscape very quickly as you go through the diversity of the landscape here."
While the commissioner said it is unlikely that the CFTC would be directly involved in creating a cryptocurrency SRO, he said it could likely offer some guidance informed by policies it has already developed for exchanges and clearinghouses with regard to cybersecurity:
"We can tell them about what we've already done and help them navigate the decisions we've already made to help inform any new concepts that could better apply to the space so they don't have to recreate the wheel," he said.
As for the CFTC's role in regulating cryptocurrencies, Quintenz emphasized that he would like the agency to avoid setting policy through enforcement actions, though it has done so in the past. He explained that policy set in that manner would lack "the same force as a commission ruling or as a judge's adjudication on a case."
Likewise, he told CoinDesk that the CFTC will continue to work with the SEC in cases where the jurisdiction lines of a given product are unclear, like ICO tokens, for example.
"Is that fake token that never got issued a commodity or security? Is it an investment pool? Is it a commodity pool? Someone's got to take down that bad actor. And we try to coordinate to make sure we know who's best equipped to do it."
Although the CFTC and SEC coordinate on such cases, the commissioner said he was unaware of - and wasn't able to give any insight into - the rumored SEC subpoena sweep directed at ICO issuers.
However, Quintenz stressed that the SEC has a job to do in ensuring that IPO laws are adhered to.
"It does not surprise me that people are trying to get around that, and it doesn't surprise me that the SEC is figuring that out. And I think that that's going to be an ongoing conversation," he concluded.
Image by Annaliese Milano for CoinDesk