Coinbase Urges Congress to Give CFTC Spot Market Jurisdiction
Crypto exchange Coinbase is pushing for a regulatory shift that would grant the US Commodity Futures Trading Commission (CFTC) full jurisdiction over spot cryptocurrency markets. This move could reduce the Securities and Exchange Commission’s (SEC) dominance in the crypto universe.
Coinbase’s Legislative Priorities
Coinbase’s policy boss, Faryar Shirzad, has recommended six legislative priorities to Congress. Most important among them is granting the CFTC the power to oversee virtual currencies like Ethereum and Bitcoin, which Coinbase wants to be considered commodities rather than securities.
“Cryptocurrencies such as Bitcoin and Ethereum are commodities, not securities. Legislation should authorize the CFTC to regulate the crypto spot market, providing transparency and safeguarding consumers from fraud and manipulation,” Shirzad said.
Though it aims to reduce the SEC’s authority, Coinbase acknowledges that some role for the agency in regulation of crypto needs to exist. Shirzad suggested that Congress create SEC-applicable rules governing capital raising so that blockchain project developers have an easier way forward in funding efforts without each token being considered a security.
Industry and Political Support
Pressure to transfer regulatory authority to the CFTC has been both supported by the cryptocurrency industry and other Republican lawmakers. In 2022, Members of Congress Tom Emmer and Glen Thompson introduced the Digital Commodity Exchange Act, which tried to authorize the CFTC to regulate digital assets.
Former CFTC Chairman Chris Giancarlo has also advocated for the agency to regulate spot crypto markets, appealing to the Senate Agriculture Committee, which oversees the CFTC. Former President Donald Trump is also reportedly considering backing this action.
Taking Control from the SEC
The SEC now regulates spot crypto markets and has concluded that neither Bitcoin nor Ether are securities. The agency has, however, been stricter in its treatment of the vast majority of other digital assets.
In 2023, then-SEC Chairman Gary Gensler argued that all cryptocurrencies except Bitcoin fell within the SEC’s jurisdiction due to their investment structure. The SEC even went so far as to pursue designating Ether as a security but dropped the inquiry in June 2024 in order to avoid possible legal defeats.
A Softer Stance on Crypto Regulation
Since the presidency of Trump, the SEC has been less tight-fisted regarding crypto regulation. This February, the agency’s new Crypto Task Force sat with companies to close gaps on staking and broker-dealer regulation, signaling a move towards more cooperative regulatory arena.
Coinbase’s proposal underscores the ongoing battle to regulate crypto. If Congress provides the CFTC with exclusive authority, it could reshape the US digital asset regulatory landscape, potentially creating greater clarity and stability for the industry.
