SEC and CFTC Roundtable: The Turf War is over, the focus is on harmony, says Caroline Femme and Paul Atkins. Other major companies in the legal and financial sector, including Nasdaq, CME Group, Intercontinental Exchange, and DRW, are also taking part in the discussion.
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Details of SEC and CFTC key statements
In recent years, the market has been operating under overlapping missions, and tokens may simultaneously fall under securities tests under the product regime within the SEC and within the CFTC jurisdiction. This made the product roadmap unpredictable as companies were forced to build multiple parallel processes for listings, custody and market surveillance.
However, the previously announced SEC and CFTC roundtables appear to meet expectations, with basic statements from key figures on the transition from competition in jurisdictions to alignment of terms, requirements and enforcement. In particular, CFTC Commissioner Caroline Femme explicitly signaled the turn.
“It’s a new day and the war on the grass is over.”
At the same time, former SEC commissioner Paul Atkins made essential clarification by stopping the assumption that cryptography regulations fall only in one jurisdiction.
“Our focus is on harmony rather than the merger of the SEC and CFTC.”
Which important provisions are subject to discussion?
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The first layer of discussion is a fundamental universal definition. This is far more important than its appearance, as a unified definition of digital goods, security, etc. ultimately determines the criteria for alignment and transition to one regime and another.
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The second layer is to list and land steps. If an institution adjusts baseline issuer checks and trading hart triggers during an incident, the exchange can design the process without replicating.
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The third layer is the management of client assets. The alignment of SEC rules for protecting funds at broker dealers with CFTC requirements for FCMS and clearing organizations removes the need to maintain two incompatible infrastructures: spots and derivatives.
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The fourth tier is market surveillance. A compatible data movement format and a consistent expectation of algorithmic transactions simplifies cross-market monitoring of operations.
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The fifth tier is the transition regulations. While issuance is regulated by the SEC, derivatives trade in CFTC infrastructure while joint staff guidance and nullification relief on tokenization of products that are regulated for issuance bridges the legal gap between primary issuance and secondary transactions.
I’m continuing to see this fundamental change
The occurrence of co-definitions, depicted processes, and designated criteria for listings, listings, custody, reporting, etc., indicates a starting point from statement to procedure. We are clearly directed towards truly clear and transparent regulations, and predictable terms of spots, derivatives and tokenized assets in the world’s major economies.
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