Coinbase has asked Congress to transfer authority over the spot cryptocurrency market to the Commodity Futures Trading Commission (CFTC).
Coinbase has asked Congress to transfer authority over the spot cryptocurrency market to the Commodity Futures Trading Commission (CFTC), a move that could significantly limit the Securities and Exchange Commission’s (SEC's) role in regulating digital assets. Faryar Shirzad, Coinbase’s Chief Policy Officer, put forward a proposal that outlines six priorities for the crypto industry, the most important being the shift of oversight to the CFTC. According to Shirzad, digital assets like Bitcoin and Ethereum should be treated as commodities, not securities, and should fall under the CFTC’s jurisdiction. He argues that the move would provide better transparency and consumer protections while reducing the risk of fraud and market manipulation.
Currently, the SEC oversees crypto markets, but it has faced criticism from the crypto community, which argues that the SEC's approach is overly restrictive. The SEC’s stance is that most cryptocurrencies, except Bitcoin, should be regulated as securities, a view made public by former SEC Chair Gary Gensler in 2023. Gensler also looked into whether Ether should be classified as a security but dropped the investigation. While the SEC maintains that many crypto assets fall under its purview, the crypto industry believes that the CFTC is better equipped to regulate these markets. The push for CFTC oversight aligns with the views of several Republican lawmakers, including Representatives Glen Thompson and Tom Emmer, who reintroduced the Digital Commodity Exchange Act in 2022. The bill aims to empower the CFTC to regulate the sector, a perspective also supported by former CFTC Chair Chris Giancarlo.
In addition to shifting authority to the CFTC, Coinbase also advocates for SEC rules that would allow blockchain developers to raise capital without automatically classifying their tokens as securities. Shirzad believes that the SEC still plays an important role, particularly in setting clear guidelines for capital raising and ensuring fair access to opportunities for blockchain developers. He argues that venture capitalists have too much control over the crypto sector, pushing projects toward outcomes that disproportionately benefit them. According to Shirzad, such a system undermines the values of crypto, which is supposed to give everyone equal access to opportunities.
The debate over regulatory oversight continues to evolve, with the CFTC gaining more support within the industry. The crypto space has long criticized the SEC for its heavy-handed approach, while the CFTC is seen as a more industry-friendly option for regulating digital assets. Additionally, reports have suggested that President Donald Trump is considering handing oversight of the crypto sector to the CFTC, which could mark a significant shift in U.S. policy toward cryptocurrencies.
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