Former CFTC Commissioner Says SEC Approach Threatens the Crypto Industry

The current regulatory framework for the US crypto industry is too unwieldy and stifles innovation. This was the view expressed in an interview with Decrypt former commissioner CFTC Brian Quintenz.

He noted that he understands industry participants’ dissatisfaction with the SEC’s approach to oversight, as well as their hopes for a different policy from the CFTC.

“I think the crypto ecosystem wants rules that align with their remit and foster the full potential of innovation. You won’t get that from the SEC,” said the former official.

During his tenure at the CFTC, Quintenz oversaw the listing of Bitcoin futures, the custody of digital assets within the traditional clearing infrastructure, the creation of tokenized products, and the growth of DeFi.

He is currently a partner-advisor at venture firm Andreessen Horowitz.

According to him, some regulators have taken a rigid approach to crypto innovation instead of paving the way for broader adoption.

“If the SEC were serious, it would not allow the securities regulatory framework to threaten the entire ecosystem,” Quintenz emphasized.

He argues that labeling cryptocurrencies as securities raises questions about how companies can meet “onerous obligations for parties who cannot do so.”

For example, if a token is named a security, it would mean there is a central issuer that must send proxy statements to all its holders, noted Quintenz.

“How does this actually work?” he wondered.

Quintenz argues that the SEC’s hardline approach effectively gave Congress room to craft a new regulatory framework in which the CFTC would gain oversight of spot cryptocurrency trading. One of the former commissioner’s focal areas has been working with lawmakers.

“The more informed a member of Congress or a senator is about cryptocurrencies, the more rational, sensible, productive, and positive the regulatory framework will be. Because they understand the potential innovations and the future benefits for people,” Quintenz suggested.

He did not agree with the idea that any form of regulation is inherently bad for the industry.

“There is a view in some circles that regulation per se is bad — it constrains, impedes, and simply comes at a cost. Some of that may be true, but if you have well-thought-out, properly calibrated legislation, the end result could be large, liquid markets with very strong integrity,” said Quintenz.

He is convinced that the benefits of a properly designed regulatory framework outweigh the potential costs for legitimate market participants.

Earlier, CFTC Chairman Rostin Behnam admitted that regulating the digital-asset market by the agency could have significant advantages, including a potential rise in Bitcoin’s price.

SEC Chairman Gary Gensler stated his support for granting Congress additional powers to oversee the crypto markets. However, he expressed confidence that most digital assets are securities and fall under the jurisdiction of his agency.

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