The two major regulators of the US are fighting over the issue of jurisdiction to deal with commodities wherein both have been claiming that the regulation of commodities is within their domains. Now the Commissioner of Commodity Futures Trading Commission has clarified that virtual assets being pure commodities fall within the exclusive domain of CFTC and not SEC. Therefore, any matter relating to virtual assets as well as their trading platforms are to be regulated by none but CFTC alone.
There has been a long-pending dispute between the Commodity Futures Trading Commission (CFTC) and the Securities & Exchange Commission (SEC). Both of them are the major regulators of the US and have their own pre-fixed jurisdictions over certain issues. However, since there is no proper law with regard to legislation, therefore, a dispute had developed between the two regulators. The dispute was that both regulators were claiming that they were the relevant authorities to deal with any issues pertaining to virtual assets.
However, the Commissioner of CFTC namely Brian Quintenz has recently clarified the dispute and issued a clarification. Quintenz reiterated that regulating the commodities is the absolute right of CFTC. He then explained that virtual assets are a product which is pure commodities. He claimed that virtual assets being commodities fall within the exclusive domain of CFTC and not SEC, which lacks the jurisdiction.
Quintenz posted a tweet post commenting that he is very clear on the issue at hand. He claimed that SEC does not have any jurisdiction over crypto as it simply cannot deal with the matters of commodities. He further described that SEC cannot even look at the platforms where commodities are trading on the basis of virtual assets. He said that the trading of wheat, oil, or even gold is in fact commodity trading and therefore falls under CFTC’s domain.
After Quintenz’s tweet post, there were statements coming from Gary Gensler, Chairman SEC for two consecutive days. In his statements, Gensler talked about crypto regulation and the lack of security for the protection of investors. He also explained the difference between securities and crypto-assets.
According to Gensler, existing security protocols are not reliable to lend protection to investors against virtual assets and their venues of trading. He urged the Government and authorities to provide SEC with further authority and additional powers along with resources for ensuring protection.
A few years ago, CFTC itself had declared that virtual assets fall within the definition of “commodities”. It also suggested at that time that crypto-assets such as Bitcoin and Ethereum too are commodities. CFTC even quoted the relevant legislature i.e. Commodity Exchange Act, which regarded Bitcoin as part of “commodities”.
There is also a ruling passed by a District Court of the US which decided in 2018 that all cryptocurrencies are “commodities”.