This is an editorial opinion of Shane Neagle, editor-in-chief of “The Tokenist.”
Continued discussion about the need for a comprehensive US regulatory framework to identify opportunities and risks in the rapidly growing Bitcoin sector has attracted wider public attention. .
Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC), recently said that proper regulation of the crypto space can have significant positive effects on market growth, especially is for bitcoin.
“Growth can happen if we have a well managed space,” Behnam speak during his appearance at New York University Law School.
Behnam also said, “Bitcoin could double if there was a market regulated by the CFTC,” which made headlines globally. His comment is not surprising as he has highlighted the need for regulatory clarity in the Bitcoin market several times before.
CFTC and SEC must work together
Earlier this year, representatives of the Senate Agriculture Committee, the CFTC watchdog, propose a new bill that would make the CFTC the main regulator of the digital asset industry and increase its control over crypto spot markets. The bill would also require commercial companies to register with the CFTC. Behnam voiced support for the bipartisan bill, which would also allow the CFTC to charge fees on regulatory entities and bolster its financial clout.
“We are [currently] misappropriated money from Congress, and it has put us in a position where we feel like we are constantly competing over how much money we are going to be misappropriated,” added Behnam. in the NYU Luật Law School event. “We’re still feeling the wounds and scars from about five or six years of constant funding.”
Behnam added that the modest financial budget and other constraints have also prevented the agency from waging a proper fight against crime related to bitcoin and other digital assets. Because the CFTC has no jurisdiction, it lacks traditional custodian services and market surveillance solutions to properly monitor trading platforms and other intermediaries, Behnam added.
These comments come about a month after former CFTC chairman, Timothy Massad, called on the CFTC and the U.S. Securities and Exchange Commission (SEC). come together and address current crypto regulatory loopholes by establishing a self-regulatory organization (SRO).
Massad argued that neither the CFTC nor the SEC had the necessary powers to regulate bitcoin and other digital assets. Currently, there is a significant gap when it comes to regulating what he calls the “cash market for crypto assets.” This includes bitcoin trading activities on exchanges like Coinbase or Kraken. While the US Congress has tried to tackle this problem through a number of bills, Massad believes the solution lies in an SRO.
Earlier this month, SEC Chairman Gary Gensler says that he supports the idea of assigning the CFTC to serve as the leading non-security cryptocurrency regulator, even though Congress should not bypass the SEC if that happens. He stressed that it is important to ensure that the securities laws governing the $100 trillion capital markets are not undermined as these laws have made capital markets the envy of the world.
Currently, the CFTC is solely responsible for regulating crypto derivatives, although many in Washington and the bitcoin-focused industry seem to support the idea of delegating cryptocurrency regulation to the agency.
Who will benefit from regulation?
The idea that a well-established regulatory framework can attract more institutional investors and drive bitcoin market adoption is a stance encouraged by many in the industry. So is Behnam Debate that digital asset companies see significant potential “for institutional capital inflows that would only happen if there was a regulatory structure around these markets.”
Behnam added that Bitcoin projects “thrive on regulatory certainty” and that the organization hopes to have more clarity in the near future to allow these companies to continue offering products. Creativity changes people’s lives. Again, this stance is not surprising as Behnam has consistently argued for the need to provide market participants with regulatory clarity – which many in the industry argue is even more important. short.
Ultimately, putting bitcoin under CFTC supervision could bring the whole discussion of securities to life. This increased clarity and visibility could then pave the way for more institutional players – who insist on having a clear framework for regulating digital assets – to increase the level of their exposure to bitcoin.
However, while many are calling for more regulatory clarity, some analysts believe a comprehensive regulatory framework could harm some of the largest businesses in the US, including Coinbase. Wells Fargo Analysts Started Researching on Coinbase underweightcited, among other factors, the risk of the government’s more restrictive stance towards digital assets.
The analysts wrote in the initial note that a harsher regulatory environment as well as continued macro trends could significantly impact Coinbase’s volume and revenue in 2023.
“Specific regulation will be a challenge for COINs, for example, note the recent discussion coming from the SEC about ‘cryptocurrency as security’ (e.g. for collateral),” Wells Fargo analysts added.
For years, the CFTC and the SEC have been vying for the role of the crypto industry’s top regulator. Both are reluctant to give more formal guidance to Bitcoin companies, choosing instead to set a legal precedent through enforcement actions.
While some industry experts are not in favor of creating a comprehensive regulatory framework for Bitcoin, many continue to emphasize the importance of having more clarity in the field. While many Bitcoin natives remain against any regulation, the additional clarity could further accelerate the asset’s growth.
This is a post by Shane Neagle. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.