• Former SEC and CFTC chairmen Jay Clayton and Timothy Massad have written an opinion piece advocating for joint regulation of the crypto industry by both agencies.
• They argue that enforcement actions taken against crypto firms are unlikely to increase investor protection.
• The chairs propose creating basic investor and market protection standards for trading platforms, eliminating “wash trading”, and having Congress mandate this approach.
Former SEC and CFTC Heads Advocate for Joint Regulation
The former chairmen of two top US financial regulators, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), think their old agencies need to work hand in hand to regulate crypto. Jay Clayton, the former chair of the SEC, and Timothy Massad, the former chair of the CFTC, co-wrote an opinion piece about domestic crypto policy in the Wall Street Journal this week.
Enforcement Actions Unlikely To Increase Investor Protection
Clayton and Massad say their former agencies’ recent enforcement actions against top crypto firms aren’t likely to increase investor protections in the sector any time soon. They suggest that other measures should be taken if investors are to be appropriately protected.
Proposed Strategy To Increase Investor Protection
The former regulatory officials propose creating basic investor and market protection standards for trading platforms as they exist today. According to Clayton and Massad, more than 90% of spot trading volume occurs on centralized platforms – making a shift in funding responsibility to industry players necessary in order to reach appropriate levels of investor protection. The two also suggest eliminating “wash trading” which can inflate prices or trading volumes with trades between oneself or affiliates – something which is estimated t represent a substantial portion of offshore trading volume.
Congress Should Mandate Approach
Clayton and Massad suggest that Congress should mandate this approach so it will be more effective as well as better funded by industry players themselves rather than relying solely on regulatory action from either agency alone.
Conclusion
The two former regulatory officials believe their proposed strategy would increase investor protection in spot-trading platforms across all sectors of cryptocurrency transactions – providing much needed oversight into what has been a largely unregulated space up until now.