U.S. CFTC and SEC develop joint rules requiring large hedge funds to report cryptocurrency exposure

This article comes fromThe Block, original author: Aislinn Keely

Odaily Translator | Nian Yin Si Tang

Odaily Translator | Nian Yin Si Tang

The U.S. Commodity Futures Trading Commission (CFTC) has voted to propose a joint rule with the U.S. Securities and Exchange Commission (SEC) requiring hedge funds to report exposure to cryptocurrencies.

Earlier yesterday, the US SEC voted in favor of the proposal. The CFTC has now voted to do the same.

The rules would require hedge funds to report exposure to cryptocurrencies through confidential filings, in part to improve the Financial Stability Oversight Council's ability to monitor systemic risk and strengthen broader regulatory oversight. Hedge funds with net assets of more than $500 million will report their exposure to cryptocurrencies in Form PF, a confidential filing created after the 2008 financial crisis. Funds will also report information related to concentrations and borrowings.

CFTC Commissioner Christy Goldsmith Romero said in a statement that the financial crisis has shown the risk of contagion in private equity activities, and the proposal aims to increase the transparency of private equity activities.

"Our goal is to increase the usefulness of the data we collect to ensure that it is actually being used by Congress to bring transparency to risks that were previously hidden," she said. Opinion."

Gary Gensler, chairman of the US SEC, also pointed out that the field of private equity funds has grown significantly in recent years in the absence of a significant transparency mechanism.

However, some commissioners were concerned that the proposed requirements could have unintended consequences for innovation.

"The proposed joint amendment is an action by the CFTC and the SEC that appears to impose an overly broad obligation that would be an unnecessary burden without persuasive action under the Commodity Exchange Act (CEA). Without a cost-benefit analysis of the force, there would be potentially significant operational challenges and costs," CFTC Commissioner Caroline Pham said in a dissenting statement yesterday.

CFTC Commissioner Summer K. Mersinger also voted against introducing the proposal. While she said she supported assessing possible revisions, she was concerned that the new proposal did not adequately take into account the input of PF reporting firms.

"The data and information that federal regulators require of market participants should be strictly tailored to the purposes of our governing regulations, and unfortunately, that does not appear to be the overall approach of this proposal," she said in a statement.

The agency will now accept public comments on Form PF amendments.

It is worth mentioning that the CFTC’s position on encryption regulation is not completely consistent with that of the SEC, and lawmakers have been working hard to clarify the specific jurisdiction of both parties.CFTC Chairman Rostin Benham on Brookings Institution Webcast, July 25Deliver a keynote address on the future of cryptocurrency regulation

. In his speech, he noted the growing interest in digital assets among Americans.

He explained that cryptocurrencies such as BTC and ETH could soon become part of mainstream financial portfolios in the country: “We are here today because digital assets are trending to become part of mainstream investment portfolios in the United States.” Surveys and polls suggest that as many as one in five adults have invested in or otherwise used cryptocurrencies.”

Furthermore, Benham highlighted the substantial increase in the number of players in the industry, adding impetus to its further growth.

Prior to this, Behnam had also announced that the CFTC was reorganizing its LabCFTC into the Office of Technology Innovation (OTI) to better connect with cryptocurrency innovators; resources dedicated to LabCFTC would be available through the OTI, reporting directly to the Office of the Chairman .

As for the recent “SEC accusing Coinbase of conducting insider trading and listing the 9 cryptocurrencies involved as securities”, the CFTC commented that if the SEC had not been involved, the case should be within the jurisdiction of the CFTC.According to informed sources

, the CFTC also investigated allegations of insider trading, but it was put on hold after the SEC declared 9 tokens (including 7 tokens traded on Coinbase) to be securities and within its jurisdiction. CFTC officials have said that bitcoin and ethereum are commodities that fall under its jurisdiction, but the legal status of thousands of other tokens, including those named in an SEC lawsuit last week, remains murky.

Shortly thereafter, the Wall Street Journalto reportto report

The proposed legislation in the U.S. Senate would treat Bitcoin and Ethereum as commodities regulated by the CFTC.

At the same time, however, the SEC's investigation of cryptocurrency exchanges has not stopped.early august,According to a staffer in the office of U.S. Senator Cynthia Lummis

, the SEC is not only investigating Coinbase, every U.S. cryptocurrency exchange, including Binance, is in various stages of investigation. According to crypto data site CoinGecko, there are more than 40 cryptocurrency exchanges in the United States.