CFTC and the U.S. SEC seek to re-establish a joint crypto regulation advisory committee

The CFTC and the U.S. SEC are planning to reopen discussions on how to effectively impose crypto regulation. One key suggestion is to reinstate the CFTC-U.S. SEC joint advisory committee charter established in 2010. The Committee will provide a platform for discussing regulatory issues affecting both agencies.

The joint CFTC-U.S. SEC advisory committee was established through the collaborative efforts of the Commodity Futures Trading Commission (CFTC) and the U.S. Securities and Exchange Commission (SEC). The Committee aimed to address emerging regulatory issues after the ‘Flash Crash’ securities market events of May 6th, 2010. 

According to a joint advisory committee report, the committee was charged with handling regulatory issues of mutual concern to both agencies. Subjects identified in the committee’s charter included identifying emerging regulatory risks and assessing and quantifying their impact and implications for investors and market participants.

Furthering the regulatory harmonization of the CFTC and the U.S. SEC was also part of the Committee’s mandate. The Committee has been inactive since 2014.

Renewed collaboration seeks to revive crypto regulation joint committee 

🚨SCOOPLET: With digital assets becoming a top priority for regulators, the @SECGov and @CFTC are currently discussing ways in which they can effectively collaborate on #crypto regulation, @FoxBusiness has learned.

One idea is to reinstate the charter for the CFTC-SEC joint… pic.twitter.com/5vJGhHyMro

— Eleanor Terrett (@EleanorTerrett) February 13, 2025

According to the CFTC, the formation of the joint advisory committee was one of the 20 recommendations included in the agencies’ harmonization report issued in 2009. Acting CFTC Chair Caroline Pham suggested the re-establishment of the joint advisory committee last year, calling it a strong signal of a new collaborative and cooperative U.S. regulatory approach to digital assets. A Fox Business News reporter hinted that the CFTC and the U.S. SEC were currently in talks with the aim of reviving regulatory harmonization.

The first item on the committee’s agenda was to review the market events of May 6 and make recommendations related to market structure and liquidity issues that may have contributed to the volatility experienced on that day. 

The Committee received two reports from the staffs of the CFTC and the SEC, a report dated May 18, 2010: “Preliminary Findings Regarding the Market Events of May 6, 2010,” and a report dated September 30, 2010: “Findings Regarding the Market Events of May 6, 2010.” Testimonies and comments were also received from various market participants, and the Committee held public meetings on May 24, June 22, August 11, and November 5, 2010.

According to Fox Business News, one proposal is to reinstitute the charter for the CFTC-SEC joint advisory committee to provide a vehicle for discussion on emerging regulatory issues that affect both agencies. 

Reopened discussion navigates regulatory overlap in the crypto market

Merkle Science reported that the complications surrounding crypto regulation have continued to increase as the global crypto market grows. The CFTC and the U.S. SEC have been responsible for supervising different aspects of the crypto landscape, although their jurisdictions often overlap. Regulatory differences between commodities under the CFTC and securities under the U.S. SEC have fueled the tension between both agencies. 

Per Merkle Science, the CFTC has clear jurisdiction over assets regarded as commodities like Bitcoin and Ethereum. However, the question of whether many newer altcoins, DeFi tokens, or security tokens should be regulated as commodities or securities is still unresolved. Stablecoins are one gray area as the CFTC claims that they may fall under its jurisdiction as commodities. The U.S. SEC has, however, argued that certain stablecoin issuers could be offering investment contracts if the tokens are marketed with the expectation of profits. 

The regulatory uncertainty has sparked ongoing debate as to whether stablecoins like USDC and USDT are securities or commodities or something else entirely. The U.S. SEC dropped investigations into Paxos in 2024 after concluding that its issued Binance USD (BUSD) did not qualify as a commodity.

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