Ex-CFTC chairman calls for SEC to regulate cryptocurrencies

Thom Thompson

Thom Thompson

Contributing Editor

Economic Studies at Brookings yesterday dropped a call for better regulation of the cryptocurrency and digital assets industries by none other than Tim Massad, the former chairman of the CFTC. As befits the former head of an agency that embraced principles-based regulation, Massad’s paper is long on analysis of the industries and the regulatory issues that seem to afflict business conditions.

Massad’s most provocative recommendation is that Congress should give the SEC regulatory authority over the cash markets for non-security crypto-assets, as well as the associated trading platforms,  wallets and advisors. Although he acknowledges that the CFTC would be competent to regulate crypto assets, Massad nods to the SEC mostly because of its experience with retail investors but also because it already has jurisdiction over tokens and crypto-assets that are securities. The expansion of the work load could be funded by industry levies as is done for the securities industry today.

Massad also calls on the crypto-asset industry to take an active role in designing the legislation and regulation.

The following are all of Massad’s recommendations:

  1. Congress should pass legislation providing the SEC (or alternatively the CFTC) with the authority to regulate the offering, distribution and trading of cryptoassets, including regulation of trading platforms, custodians (or wallets), brokers and advisors.

     

  2. Congress should increase the resources of both the SEC and the CFTC to implement new as well as existing authorities pertaining to regulation of cryptoassets.

     

  3. The legislation should set forth core principles, rather than specifics for regulations, as Congress has done for the futures industry and crowdfunding. [named core principles deleted] Congress should direct the agency to issue regulations to implement the core principles and on such other matters as the agency believes are necessary to promote transparency, integrity, customer protection and financial stability.

     

  4. With respect to offshore platforms that solicit or provide access to U.S. investors, Congress should give the relevant agencies the authority to determine whether such platforms should be required to comply with U.S. standards, or demonstrate compliance with comparable standards, or disclose prominently that they do not meet such standards.

     

  5. Congress should direct the relevant agencies to consider whether there may be different ways of meeting core principles for centralized versus decentralized platforms and systems and, where practicable, have regulations that do not favor one approach over another.

     

  6. As a first step toward the development of legislation, the Financial Stability Oversight Council or the Treasury Department should issue a report recommending Congressional action to strengthen and clarify regulation of the sector.

     

  7. The industry should continue to develop its own self-regulatory standards. The legislation should give the lead agency the authority to allocate responsibility for certain enforcement or compliance matters to a self-regulatory entity.

John Lothian Newsletter

Today's Newsletter

The curious case of rising stocks in the night-time

The curious case of rising stocks in the night-time

First Read Hits & Takes John Lothian & JLN Staff Congratulations to uber journalist Jacob Bunge on being promoted to the role of Chicago deputy bureau chief for The Wall Street Journal. Bunge has been with the Journal since 2008, when he came over from...

We visit more than 100 websites daily for financial news (Would YOU do that?)

Now Read This

Book “Regtech, Suptech and Beyond” Looks at Technological Solutions for Regulatory Oversight

Book “Regtech, Suptech and Beyond” Looks at Technological Solutions for Regulatory Oversight

There is a new book out from Risk Books titled “Regtech, Suptech and Beyond.”

The book is a compendium of chapters addressing technology and innovation in regulatory and supervisory oversight in financial services. Different authors explore the emerging best practices in regulatory oversight and financial services that leverage technological solutions.

SEC Special Counsel Laura Harper Powell collaborated with the former President of ICE Trade Vault and current President and Founder of CoinReg Tech Bruce Tupper on a chapter in the book focusing on CFTC regtech implications for virtual currency trading.

Telstra’s Adam Day Expounds on November Equinix Deal; Opportunities for Trading, Fintech, Crypto, Gaming Into Asia

Telstra’s Adam Day Expounds on November Equinix Deal; Opportunities for Trading, Fintech, Crypto, Gaming Into Asia

In early November Telstra partnered with Equinix to enhance the Telstra Octagon financial services solution and expand global access and direct connectivity between North America and eight of the world’s major futures and commodities exchanges. JLN interviewed Telstra’s Adam Day after the FIA EXPO about this deal and what it means for Telstra’s customers and potential clients.

The Telstra Octagon solution uses Telstra’s ultra-low latency global networks to support high-frequency trading activities. And now, with Telstra’s financial trading solution available on Platform Equinix, Telstra can now offer financial organizations improved network connectivity, access to the Equinix data center and colocation and Equinix Fabric interconnection services adjacent to the exchanges.

Fireside Chat Launches FIA Asia with Regulatory Discussion

Fireside Chat Launches FIA Asia with Regulatory Discussion

Regulatory issues were the first order of business at the first panel of FIA Asia Tuesday Morning (Monday night for those of us in Chicago) as Walt Lukken held a virtual fireside chat with Sharon Shi, chair of FIA Asia’s regional advisory board and managing director at G.H. Financials, and Bill Herder, FIA’s head of Asia-Pacific.

FIA EXPO 2021: Sam Bankman-Fried Says FTX Won’t Follow the Crypto Crowd

FIA EXPO 2021: Sam Bankman-Fried Says FTX Won’t Follow the Crypto Crowd

Sam Bankman-Fried, the “richest person in crypto” according to Forbes Magazine, is the founder of FTX, a leading exchange for buying and selling crypto derivatives. John Lothian News spoke with him at FIA Expo 2021, where he talked about how the crypto space has grown and changed, crypto versus “traditional finance,” and the latest trends, including NFTs.

Pin It on Pinterest

Share This Story