CFTC's Role in Crypto Regulation and The Need for New Laws

According to Cointelegraph, the United States Commodity Futures Trading Commission (CFTC) has been instrumental in the "regulation by enforcement" approach, working alongside the Securities and Exchange Commission during President Joe Biden's administration. This strategy is highlighted by recent charges against Uniswap Labs. At the North American Blockchain Summit on November 21, CFTC Commissioner Summer Mersinger emphasized the necessity for standardized crypto-related policies through notice and comment regulation.Mersinger elaborated on how recent legal actions against a decentralized autonomous organization (DAO) required the CFTC to seek a court ruling for entity classification. The CFTC aimed to categorize the DAO as either a corporation or an association. Mersinger expressed discomfort with setting policy through enforcement cases and court proceedings, stating that determining how to treat an entity is fundamentally a policy issue.Mersinger argued that while crypto entities, including decentralized finance (DeFi), are often charged under existing categories and expected to comply with the same laws, there is no official registration provision for them. She noted that the settlements reached do not provide sufficient guidance for those attempting to comply with regulations. As a result, Uniswap, despite its efforts to adhere to regulations, faced additional charges but ultimately settled with the CFTC for a notably small fine.Despite the relatively small fines compared to other agencies like the SEC, Mersinger believes the CFTC is the "ideal regulator for the cryptocurrency spot market" due to its ability to implement significant legislative changes swiftly and without market disruption. She advocated for new laws and regulations for crypto firms, despite her conservative stance, to prevent agencies like the Federal Communications Commission from causing chaos with inappropriate charges.Mersinger also advised the crypto industry to engage with the new administration as soon as its leadership is established. She encouraged early dialogue, emphasizing the importance of initiating conversations from the outset. This proactive approach is seen as crucial for the industry's growth and adaptation to new regulatory landscapes.