SEC Chairman Is Working On A “Memo Of Understanding” To Unit All Financial Agencies In Supervising Crypto Industry

SEC Chairman Gary Gensler is all for US financial agencies teaming up to watch the crypto market.

For years, there have been concerns about companies operating in the crypto market not getting enough attention from the US SEC and other financial agencies like the CFTC. Due to this, the risk of some entities slipping through the regulatory mesh and undertaking illegal operations has increased.

Now, the current SEC chairman is moving to streamline things. His attention is focused on the crypto market. Reports have it that the said chair, Gary Gensler, is now looking for a way to enhance coordination with other agencies to properly oversee the markets.

Regulators To Work Together

While the SEC and CFTC have worked together in the past, they haven’t been particularly close in terms of jurisdictions. Historically, the SEC has always handled matters pertaining to securities while the CFTC has handled derivatives or commodities. Now, with the rise of the crypto industry, this borderline seems to get blurred every day. This is why Gensler is now formulating a plan to have the two agencies co-operate in policing the crypto market.

Gensler said: “If a token represents a commodity and it is listed on a platform overseen by the SEC, the securities regulator would send that information over to the CFTC.”

He further said:

“I’m talking about one rule book on the exchange that protects all trading regardless of the pair — [be it] a security token versus security token, security token versus commodity token, commodity token versus commodity token” to protect investors against fraud, front-running, manipulation as well as providing transparency over order books.”

The main focus of the cooperation between the two agencies is set on the various crypto entities that list tokens. This follows a recent move by lawmakers to deliberate on a new bill to decide on which agency will be mandated with regulating the crypto industry. Most of the arguments seem to lean on giving the powers to the CFTC. This stems from the assumption that cryptos are more of commodities than securities.

Crypto Regulations Still In Limbo

While Gensler is keen to team up with the CFTC to fight bad actors in the financial markets, the crypto market still remains largely unregulated. For a while, the SEC has seemed to drag its feet when it comes to formulating a regulatory framework for the crypto market. Teaming up with the CFTC may help overcome this hurdle. Interestingly, a list of priorities released to cover the year 2022 doesn’t include any efforts to regulate the crypto market.