- Two former U.S. regulators have been calling for joint oversight of crypto platforms by major financial agencies.
- Efforts include proposals for a self-regulatory organization (SRO) with unified rules for all crypto tokens traded on platforms.
- Timothy Massad testified to the Senate Banking Committee to argue against strict binary classification of crypto assets.
- The House’s proposed Clarity Act could replace current securities safeguards and faces criticism from some experts.
- The Senate is still working on its approach to crypto market regulation, releasing guiding principles but no full draft yet.
Timothy Massad, the former Chair of the Commodity Futures Trading Commission (CFTC), testified on July 9 before the Senate Banking Committee about cryptocurrency regulation. He joined Jay Clayton, former Chair of the Securities and Exchange Commission (SEC), in calling for new rules to address oversight of digital asset platforms in the U.S.
Massad and Clayton first proposed a joint self-regulatory organization (SRO) in late 2022 after the bankruptcy of the FTX crypto exchange. Their plan suggests placing any platform that trades major cryptocurrencies such as Bitcoin and ether under joint oversight by the CFTC and SEC. Regulation would apply to all tokens traded on those platforms, regardless of whether each is classified as a commodity or a security.
In his written testimony, Massad stated, “Legislation that writes detailed rules that create a binary classification scheme is bound to fail.” He explained that trying to define every token as either a security or commodity can lead to gaps in supervision. He added, “Many believe Congress needs to pass a law with extremely detailed provisions precisely because regulators failed to develop appropriate rules and guidance over the last four years… We now have leadership at the SEC and CFTC who are committed to developing appropriate rules and guidance. While I may not agree with everything they do, I don’t think Congress can do their jobs better.”
Massad argued that Congress should focus on giving regulators the authority to supervise crypto markets that do not involve securities. He said lawmakers should empower the CFTC and SEC to work together on regulations, rather than write specific operational rules into law.
Currently, the House has advanced the 236-page Clarity Act out of committee. According to Massad, this bill risks undermining existing securities regulations, which protect much larger financial markets. The Senate Banking Committee has not yet introduced a full bill, but it released a set of market structure principles last month.
The exact direction for new U.S. crypto regulations remains unsettled as lawmakers and agencies work to balance oversight and innovation.
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