Crypto regulation: CFTC versus SEC, the Proof of Stake (PoS) war

The SEC maintains a stubborn – Proof of Stake (PoS) tokens must be registered with the SEC (Securities Exchange Commission). Gary Genslerhis boss, harpooned the Kraken exchange in February who had dared to offer staking services without registering. And he gave a layer of it recently at the turn of a commission on cybersecurity. All the details.

SEC against CFTC, the battle of the chiefs

” – It’s a fresh fish !

“No, it’s not fresh…”

The argument raging between the two US regulatory bodies, the DRY on one side and the CFTC (Commodity Futures Trading Commission) on the other, is reminiscent of this famous spat in a small Gallic village that we know well. A fratricidal struggle that has already lasted for months, even years. Now the blur on a regulation that is slow to arrive.

Last week, Rostin Behnam, chairman of the CFTC, took the floor. He was announcing that, in his view, Ethereum and stablecoins would eventually considered as commodities, i.e. raw materials. Gary Gensler, on the other hand, seems not hear it that way at all.

“The public of investors invested [dans ces cryptos] anticipating a return, expecting something from these tokens (…) Proof of Stake, like 2%, 4% or 18% returns. (…) Whatever they promote and put in their protocol, whether they block their tokens in a protocol, a protocol often developed by a small group of entrepreneurs and developers, I suggest that each of these service providers seek to compliant, the same for all intermediaries. »

Gary Gensler, Chairman of the SEC

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Discord among crypto regulators

In other words, crypto investors seek to earn profits from their investment. According Howey’s test, this simple fact would categorize cryptos as stocks. Except that the view is simplistic. We are not specifically looking to profit from holding stablecoins. Unless you put them to work in DeFi. If the expectation of future profits is THE important criterion, how could Bitcoin be taken out of the equation? Why alone would he be a raw material? Let’s look at the problem in the other direction, aren’t the holders of gold, a raw material par excellence if there is one, also seeking to derive a capital gain on their investment?

In short, the categorization of cryptos is far from obvious. And it is likely that if you want to fit a circle into a square, it may never fit. Unless you force it. However, there is very little chance that the dusty old regulatory framework of the SEC will perfectly suit this new crypto UFO straight out of digital.

However, the whole challenge of the development of blockchain, crypto, web 3, NFT, DeFi and so many other promising sectors in the coming years is based on the relevance of the regulatory framework which will be applied to them. A framework that will not be at all the same depending on whether the SEC bull shark or the CFTC hammerhead shark wins this battle of fish.

And it is very likely that neither of them is right. Since altogether logical, a new emerging technology requires a brand new regulatory framework, tailor-made to allow it to develop properly. Perhaps a miracle recipe, a magic potion, would be needed for this?

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