CFTC commissioner urges crypto policy reforms

The United States Commodity Futures Trading Commission (CFTC) has played a key role in implementing the “regulation by enforcement” strategy alongside the Securities and Exchange Commission under the outgoing administration of President Joe Biden, as evidenced by recent charges against Uniswap Labs.

Speaking at the North American Blockchain Summit on Nov. 21, CFTC Commissioner Summer Mersinger discussed the need for standard crypto-related policies through notice and comment regulation.

Marsinger explained how recent litigation against a decentralized autonomous organization (DAO) previously required the CFTC to involve a court verdict for entity classification. In this case, the CFTC wanted to classify the DAO as a corporation or association:

“I really started to get uncomfortable with this idea that we were kind of setting some sort of policy through our enforcement cases and through going to court. To me, how you’re going to treat an entity that’s a policy question.”

Need for regulated relief for the crypto industry

Mersinger argued that while crypto entities, including decentralized finance (DeFi), are often charged under the existing categories and expected to operate under the same law, there is no provision for them to officially get registered. She added:

“This is really tricky settlements because the information we share publicly with our enforcement settlements really doesn’t offer a lot of guidance for anyone who’s trying to do the right thing.”

As a result, Uniswap tried to do the right thing but ended up attracting more charges, Mersinger explained. However, Uniswap settled with the CFTC for an unusually “very small fine.” 

Related: Bitcoin ETF options pass ‘second hurdle’ with CFTC clearance

Despite the small size compared to the other agencies, such as the SEC, Mersinger believes that the CFTC is the “ideal regulator for the cryptocurrency spot market” as it can implement major legislative changes fairly quickly without disruptions to the market.

New laws can help crypto companies fight wrongful litigation

Moreover, she supported the introduction of new laws and regulations for crypto firms despite her predominantly conservative stance:

“What we’re seeing right now is that without those laws, you have agencies like the Federal Communications Commission (FCC) who can come in and create chaos and bring charges where maybe it doesn’t fit.”

Mersinger also recommended the crypto industry start engaging with the new administration as soon as its leadership has been identified. “Don’t be afraid to start knocking on doors on day one because I think it’s critical to start” the conversations early on, she said.

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