Back in 2015 when the Federal Court judge, Jack Weinstein said that cryptocurrencies comes under commodities and are to be regulated by U.S. Commodity Futures Trading Commission [CFTC], no hell was broken about it.
Back then, there was a case running against Patrick K. McDonnell and CabbageTech Corp also known as Coin Drop Markets [CDM]. They had taken funds from customers in the form of fiat money or cryptocurrency. Later on, the money was claimed to be a ‘default’ and any proof of the company’s existence was removed.
The federal judge of that time handed over the case to CFTC to solve it. CFTC found that the defendant CDM Corp. had not followed the expected rules at any level. Since then, CFTC was held responsible for any case related to cryptocurrency.
CFTC stated on its website:
“to avoid systemic risk, the Commission aims to protect market users and their funds, consumers, and the public from fraud, manipulation, and abusive practices related to derivatives and other products that are subject to the Commodity Exchange “
This ruling has caused problems with the jurisdiction of cases involving cryptocurrency, ICO, etc. As the U.S Government has two agencies which are currently dealing with issues regarding cryptocurrencies, namely the SEC and CFTC, they are no clear rules which differentiate each others’ jurisdiction.
Brian Quintenz, the CFTC Commissioner says:
“Participants in this market want a credible marketplace.”
The SEC gave a public statement that all that digital platforms which are associated with securities should register with the SEC.
SEC announced that:
“Registration as a broker-dealer subjects the ATS to a host of regulatory requirements, such as the requirement to have reasonable policies and procedures to prevent the misuse of material non-public information, books and records requirements, and financial responsibility rules, including, as applicable, requirements concerning the safeguarding and custody of customer funds and securities,”
Even with this clear statement given by the SEC, it is hard for the government agencies as well as the common public to distinguish which of the 1000+ cryptocurrencies fall into which category as there is a thin line of difference between them.
Brian Quintenz also says:
“Regulation can add to credibility… And I think the participants in this market want a credible marketplace.”
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