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CFTC Commissioner Stump Criticizes the 'Oversimplification' That Cryptocurrencies Are Either Securities or Commodities

According to Dawn Stump, a commissioner at the Commodity Futures Trading Commission (CFTC), the main commodities regulator in the United States largely regulates derivatives markets rather than spot commodity markets.

In 2018, Stump, who was nominated by then-President Donald Trump, joined a growing group of regulators arguing whether federal agency should oversee the burgeoning digital asset market in the US.

Stump highlighted a "grossly incorrect oversimplification" that digital assets are either securities or commodities that are regulated by the CFTC in her remarks. If they are considered securities, the Securities and Exchange Commission in the United States will regulate them.

Because the CFTC exclusively regulates futures contracts and derivative products like swaps, Stump said it doesn't matter if digital assets are categorized as securities or commodities because they wouldn't come under the CFTC's jurisdiction until a futures or derivatives contract is involved.

SEC Chairman Gary Gensler stated earlier this month that his agency should oversee a wider part of the crypto industry, including the spot market and exchanges that list any coins that are subject to securities legislation. In response, pro-crypto CFTC Commissioner Brian Quintenz tweeted that the SEC has no jurisdiction over “pure commodities or their trading venues,” indicating that the CFTC is in charge.

Stump also clarified the distinction between the CFTC's regulatory power, which she claims does not extend to digital assets, and its wider enforcement authority, which she claims does. Stump said the CFTC has traditionally utilized its anti-manipulation and anti-fraud enforcement power to safeguard cash commodities, citing the agency's action against crypto exchange and derivatives trading platform BitMEX as one example.

“Because well-functioning futures contracts (and other derivatives products) depend on a healthy underlying cash market and may price using cash market indices. As a result, the CFTC uses this enforcement power to safeguard the integrity of the derivatives markets it oversees,” Stump wrote.

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