Crypto Enforcement Faces Regulatory Hurdles
At the North American Blockchain Summit, CFTC Commissioner Summer Mersinger emphasized the need to institutionalize US cryptocurrency regulations. She attacked the “regulation by enforcement” strategy adopted by the Commodity Futures Trading Commission and the Securities and Exchange Commission. Such a reactive tactic has inadvertently given the industry and regulators unclear policies to work with, she said.
Mersinger cited examples of Uniswap Labs and a DAO, where ambiguities in policy put courts in a position of having to classify entities. “Policy questions should not be resolved through enforcement cases,” she said, emphasizing that the commission should employ formal rulemaking processes.
Regulated Relief for the Crypto Industry
She conceded that crypto firms, especially those dealing in DeFi, had to operate in an environment that was not very easy to comply with. She said current frameworks did not allow official registration, hence making them susceptible to enforcement despite compliance efforts.
Mersinger referred to Uniswap Labs, which wanted to comply with the law, and yet they still got minor charges. The case ended up settling for the small fine, but it does not provide much guidance for other companies. “The settlements provide insufficient clarity for those trying to do the right thing”, Mersinger said, adding that she believes what is needed is clear and structured regulations.
CFTC’s Role as a Crypto Regulator
Although much smaller than the SEC, Mersinger had the CFTC well positioned to be that regulator for the cryptocurrency spot market. She made a case for how, legislatively speaking, the agency could take swift, fair action that would hurt markets less .
By taking on a more proactive role, the CFTC could help the crypto industry overcome a host of systemic issues, including wrongful litigation and unclear pathways for compliance.
Engagement with the Incoming Administration
Mersinger urged crypto companies to reach out and work with the incoming US administration so that it would go easier for both parties. “Knock on doors on day one”, she said, stressing early and proactive dialogue with new leadership.
She further emphasized that new laws could reduce chaos from other agencies entering the crypto space, such as the FCC. Clear legislation would shield the industry from misaligned charges and offer a fertile ground for innovation and growth.
By addressing regulatory gaps and fostering coordination, Mersinger’s proposals go a long way in providing some respite and clarity to the evolving crypto sector.
