Regulation and Oversight of Virtual Currencies by SEC and CFTC Agencies to be Reviewed, Congressional Hearing Set

• The Committee on Banking, Housing and Urban Affairs sets hearing for February 6 to review oversight role of the SEC and CFTC over virtual currencies, such as bitcoin
• In an op-ed written jointly by the SEC and CFTC, agency chiefs say they would support policy efforts to revisit framework of their cryptocurrency regulation; both will testify before the committee
• Agencies say they will seek to maintain integrity and transparency in the volatile cryptocurrency markets; goal is to protect all market participants and investors

Virtual currency oversight by the Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) will be reviewed after the heads of both agencies testify on February 6 before a hearing of the Committee on Banking, Housing and Urban Affairs (http://nnw.fm/uO4zB).

Jay Clayton, chairman of the SEC, and J. Christopher Giancarlo, chairman of the CFTC, will testify at the hearing. What they will say was telegraphed in their recent jointly-authored op-ed (http://nnw.fm/07y1F). In it, they noted that most check-cashing and money transmission services are state regulated. They argue that most of the internet-based cryptocurrency trading platforms have registered as payment services and, therefore, are not subject to direct regulation today by the two federal agencies.

Their op-ed said, “Many of the internet-based cryptocurrency trading platforms have registered as payment services and are not subject to direct oversight by the SEC or CFTC. We would support policy efforts to revisit these frameworks and ensure they are effective and efficient for the digital era.”

The agencies said they seek market integrity and transparency. In the op-ed, they note that they seek review of their oversight of these markets and would continue to work with law enforcement to enforce this goal. “The CFTC and SEC, along with other federal and state regulators and criminal authorities, will continue to work together to bring transparency and integrity to these markets and, importantly, to deter and prosecute fraud and abuse,” they added.

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