SEC, CFTC sign memo to regulate crypto, other markets in harmony

Two of the US’s most influential financial regulators have agreed to better coordinate oversight of the financial markets, seeking to put an end to decades of “regulatory turf wars” between them.

According to the memorandum of understanding written on Wednesday, the US Securities and Exchange Commission and US Commodity Futures Trading Commission said it has become a “pivotal time” to regulate in harmony as new technologies, such as crypto, make it more challenging to monitor the markets:

“New trading models, digital infrastructure, and onchain, automated systems increasingly blur traditional jurisdictional lines,” they said, particularly as market participants operate across platforms and asset classes.

To address that problem, the SEC and CFTC said they will aim to provide regulatory clarity and certainty built on technology-neutral regulations and share information and data concerning issues of “common regulatory interest” to fulfill their respective regulatory mandates.

In a separate statement, SEC chair Paul Atkins said the memo is the latest step toward repairing the relationship between the agencies: 

“For decades, regulatory turf wars, duplicative agency registrations, and different sets of regulations between the SEC and CFTC have stifled innovation and pushed market participants to other jurisdictions.”

Source: Mike Selig

Both the SEC and CFTC have made strides to deliver on US President Donald Trump’s mission of making the US the “crypto capital of the world,” having set up a crypto-specific task force and established an advisory committee to ensure crypto, AI and other emerging tech innovations continue to push forward in the US.

The agencies also noted in the memo that they strive to provide a “fit-for-purpose regulatory framework for crypto assets.”

Related: SEC chair calls for ‘coordinated oversight‘ between US regulators

The regulatory clarity will be provided to market participants operating everything from trading platforms, clearinghouses and data repositories to pooled investment vehicles, dealers and intermediaries, in addition to products that span securities and derivatives frameworks.

SEC, CFTC to adopt “minimum effective dose” strategy

The two agencies said they also plan to adopt a “minimum effective dose” regulatory strategy to foster innovation while maintaining market integrity and remaining competitive in the global market.

The term “minimum effective dose” is a pharmacological term, defined as the smallest dose of medication that produces the desired therapeutic benefit.

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