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A Danger to DeFi? SEC Crypto Powers Challenged by Former CFTC Commissioner.

  • Former Commodity Futures Trading Commission (CFTC) commissioner Brian Quintenz says the Securities Exchange Commission’s regulatory approach is “threatening the entire [crypto] ecosystem.”
  • Quintenz says crypto companies should be able to innovate without fear of harsh legal retribution.
  • The CFTC has been vocal that if it were given the brunt of crypto regulating duties, the market would thrive under its watch.
SEC crypto - A Danger to DeFi? SEC Crypto Powers Challenged by Former CFTC Commissioner.

Source: Chinnapong / Shutterstock

One of the big battles in crypto right now isn’t between two exchanges duking it out for supremacy, nor is it two decentralized finance (DeFi) giants vying to be the blockchain’s Meta Platforms (NASDAQ:META). Rather, it’s between two U.S. government agencies. And, it’s a competition with vast implications for the future of the crypto investing world. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are both trying to be the lead enforcer in digital assets. The former has taken an aggressive role in regulating the market thus far. But, one former CFTC commissioner is challenging the SEC’s crypto powers outright.

Brian Quintenz is an advisory partner at crypto investment firm a16z. Before this, though, he had a role as a commissioner at the CFTC. With experience working under the agency, and his current role entrenching him in the crypto space further, Quintenz can speak as an authority on regulations. And he’s becoming quite vocal regarding the SEC’s aggressive, litigious approach toward crypto regulations and how they might be a heel to the industry.

The way that the SEC is regulating now, according to Quintenz, is “threatening the entire ecosystem.” In the last two years, the SEC has taken to a pattern of accusing companies of illegal activities, launching probes, and taking companies to court. It seems to be hoping to establish a precedent painting most cryptocurrencies as securities, rather than commodities. If successful, the agency would likely be given the brunt of regulatory duties by Congress.

In an interview with Decrypt, Quintenz is expanding on this take. He says many crypto companies welcome regulations. Though, they want ones that don’t stifle innovation and allow companies to reach their full potential. “You’re not getting that out of the SEC.”

SEC Crypto Powers Threaten Crypto Market, According to ex-CFTC Commissioner

The SEC’s crypto regulation spree doesn’t seem to be ending soon. But, lawmakers are drumming up bills for digital assets. And now, it’s apparent they’ll have to take a side in the “security vs. commodity” debate. Quintenz contends that these lawmakers have an opportunity to regulate the industry while softening the SEC’s aggressive behavior.

In a slight to the SEC’s practices, Quintenz asserts that regulations are a positive thing, “as long as it doesn’t criminalize or overly-penalize certain activities that are based off of a very ambiguous standard that a regulator has not clarified.”

He adds that this depends on lawmakers’ knowledge about cryptocurrencies. The better their knowledge, the more effective these laws are expected to be. Moreover, more knowledgeable lawmakers will diffuse fears among crypto companies of harsh retribution over innovation.

One of the biggest things lawmakers must do before creating regulations is going to be divvying up jurisdiction over the space between the SEC and the much more crypto-friendly CFTC. One of the most popular crypto bills right now, Sen. Cynthia Lummis’ crypto bill, would give the CFTC most of the power, as it would treat a majority of the world’s cryptos as commodities and only a few as securities.

Under this bill, crypto companies would be more likely to see a future like the one Quintenz calls for. The CFTC has been taking a more cautious and learning-based approach to the market, a move that has been praised by crypto figures. CFTC chair Rostin Benham has even predicted that crypto price could double under the CFTC’s watch. This has added to the calls to remove regulating duties from the SEC in favor of the CFTC.

On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.

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