US market regulators are merging their operations in places where the functions of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) overlap, and the creation of a cryptocurrency oversight framework is among the main objectives of a written agreement published on Wednesday.
Most of the objectives of the memorandum of understanding By combining oversight, product approvals and policy interpretations, as well as coordinating enforcement actions and providing dual registration, it will affect the regulated majority of the crypto sector. But the agreement also specifically lists as a primary objective “Providing an adequate regulatory framework for cryptoassets and other emerging technologies.”
SEC Chairman Paul Atkins had previewed the memorandum of understanding in comments Tuesday, detailing how the agencies are providing contact information for regulated firms to convene combined meetings to discuss policy issues and product applications.
“For decades, regulatory turf wars, duplicate agency filings, and different sets of regulations between the SEC and CFTC have stifled innovation and pushed market participants to other jurisdictions,” Atkins said in a statement Wednesday. “By aligning regulatory definitions, coordinating oversight, and facilitating secure and seamless data sharing across agencies, we will ensure our rules and regulations provide the clarity market participants deserve.”
The new agreement says that CFTC and SEC staff will meet periodically and share data on mutual interests. This includes enforcement actions, which have historically been carried out independently, sometimes leaving a crypto company facing similar accusations from both agencies. If the two regulators overlap in an enforcement case, they agree to “confer on potential charges and relief, sequencing of filings, litigation strategy, and public communications.”
During the previous administration, other crypto positions of the two agencies sometimes directly contradicted each other, including in how certain assets were placed in which category: securities or commodities.
Now, their enthusiasm for friendly crypto rules is mutual and essentially unopposed, with the CFTC led by a single Republican chairman on an otherwise empty five-member commission and the SEC led by Atkins and two other Republicans, with Democratic seats kept vacant.
The agency chairs were appointed by President Donald Trump, who came to office last year with a new enthusiasm for cryptocurrencies, stemming in part from his own growing business interests. Both Atkins and CFTC Chairman Mike Selig had worked for crypto clients before taking their positions.
