US lawmakers push for stricter crypto regulation while India reiterated its plan for a slow, evolutionary approach to digital asset legislation. Image by Kerem Goktug Kaya, DALL-E 3.The past week saw major developments on the crypto regulation front. In the United States, The CFTC Chairman classified many tokens as commodities, contrasting with the SEC’s view that crypto firms deal in securities. The statement added to calls for regulatory clarity from Congress.
The bipartisan Senate support expanded for legislation closing anti-money laundering gaps exploited with cryptocurrencies. Meanwhile, a Republican lawmaker accused the SEC of deliberately obfuscating crypto regulation and questioned whether personal agendas were overriding legal obligations.
India also grabbed headlines by signaling it will take a gradual approach to crypto policymaking, unlike swift action by some global counterparts.
CFTC Chairman Classifies Many Tokens as Commodities
Yesterday’s comments from the CFTC Chairman sparked fresh debate around the complex task of appropriately classifying digital assets.
In a CNBC interview, CFTC Chair Rostin Behnam diverged from the SEC’s stance by stating that many crypto tokens constitute commodities under existing laws. In contrast, SEC Chair Gary Gensler strongly claims that crypto intermediaries deal in securities requiring SEC oversight.
"It is figuring out how existing, decades-old law, fits into this new technology that seems to be changing and ultimately needs a new way of thinking around policy and legislating," says @CFTCbehnam on #crypto. "Under existing law, many of the tokens constitute commodities." pic.twitter.com/F3JPjWq3wG
— Squawk Box (@SquawkCNBC) December 12, 2023
While Behnam acknowledged the need for regulatory clarity from Congress, he also highlighted the CFTC’s progress in shoring up rules around illicit finance risks. The agency has made efforts to implement stricter AML and KYC standards for the cryptocurrency industry.
Behnam’s recent remarks echoed his previous calls for swift regulatory frameworks tailored to digital assets. His pleas conveyed an urgency rooted in the rapid evolution of blockchain technology and crypto markets since the pandemic’s onset.
Despite rumors of disagreements with Gensler, Behnam emphasized a collaborative working relationship between the agencies. He cited shared goals of market integrity and consumer protection as underlying any differences in approach.
In Behnam’s view, the core challenge stems not from interagency tension but rather from the difficulty of fitting decades-old laws into blockchain. This problem requires fresh thinking from lawmakers and regulators as they balance their approach
The CFTC Chairman’s call for crypto-specific policies adds to the growing chorus of experts urging updated rules and guidance around digital assets. How regulators and legislators define and govern cryptocurrencies will profoundly impact the shape and direction of the industry.
Bipartisan Anti-Money Laundering Bill Extends Crypto Regulations
This week also saw an expansion of Senate support for legislation to close cryptocurrency’s AML gaps.
Senators Elizabeth Warren and Roger Marshall announced on Monday growing bipartisan endorsements for their bill extending AML rules to crypto entities like exchanges.
The proposal would mandate KYC and suspicious activity reporting requirements for digital asset firms similar to TradFi. Critics have pointed out that the absence of these standards is a regulatory flaw, which allows for the undetected funding of crime and terrorism.
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