SEC and CFTC Chairs Discuss Cryptocurrency Regulation at ISDA Meeting

The annual meeting of the International Swaps and Derivatives Association (ISDA) began on Wednesday in Madrid. The Chairman of the United States Securities and Exchange Commission (SEC), Gary Genesler, and the Chairman of the United States Commodity Futures Trading Commission (CFTC), Rostin Behnam, they were the main speakers of the meeting; Behnam spoke in the morning session and Gensler in the afternoon.

Behnam spoke at length about “an amended registration warrant application as a derivatives clearing organization (DCO) by an entity that purports to offer non-brokered clearing of margined products to retail participants,” which was a transparent reference to the FTX US application.

“As other registrants have expressed an interest in exploring similar models, and given the potential impact on clearing members and FCMs [comerciantes de comisiones de futuros]” […] it is essential to be transparent and offer an opportunity to listen to the public,” Behnam said, while introducing the CFTC roundtable on the issue to be held later this month.

It is possible that the CEO of FTX, Sam Bankman-Fried, was listening to Behnam, as he was present at the conference and engaged in an informal chat a few hours later.

Behnam continued remembering his testimony in the Senate in February and said that:

“I will continue to advocate and support the legislative authority for the CFTC to develop a regulatory framework for the digital cash asset market.”

Currently, the CFTC only regulates derivatives markets, although it has exercised enforcement authority over cash markets, such as the fine it imposed on Coinbase for misreporting exchange volume and “auto-trading” in 2021.

Gensler talked about “the intersection of crypto assets with derivatives” in his speech, significantly shorter. He said:

“If platforms – whether in the decentralized or centralized finance space – offer security-based swaps, they are bound by securities laws and must work within our securities regime.”

Gensler stressed the need for ISDA to “recognize that if the underlying asset is a security, the derivative must comply with securities regulations” while developing legal standards for crypto derivatives.

Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.

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