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Chairmen from the SEC and CFTC discuss crypto regulation at ISDA assembly

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The annual assembly of the International Swaps and Derivatives Association (ISDA) started Wednesday in Madrid. United States Securities and Exchange Commission (SEC) chairman Gary Gensler and U.S. Commodity Futures Trading Commission (CFTC) chairman Rostin Behnam had been each featured as keynote audio system on the occasion, with Behnam talking on the morning session, and Gensler within the afternoon.  

Behnam spoke at size about “a request for an amended order of registration as a derivatives clearing organization (DCO) by an entity seeking to offer non-intermediated clearing of margined products to retail participants,” which was transparently a reference to FTX US’s request.

“As other registered entities have expressed interest in exploring similar models, and given the potential impact on clearing members and FCMs [futures commission merchants]” […] it’s paramount to be clear and supply a possibility to listen to from the general public,” Behnam mentioned, plugging the CFTC roundtable on the topic arising later this month.

FTX CEO Sam Bankman-Fried could have been listening as Behnam spoke, as Bankman-Fried was current on the convention and took part in a hearth chat just a few hours later.

Behnam went on to recall his February Senate testimony and say that:

“I will continue advocating for and supporting legislative authority for the CFTC to develop a regulatory framework for the cash digital asset commodity market.”

Currently, the CFTC solely regulates derivatives markets, though it has exerted enforcement authority over money markets, such because the high-quality it imposed on Coinbase for improper reporting of trade quantity and “self-trading” in 2021.

Related story: Bipartisan invoice to present CFTC authority over exchanges and stablecoins

Gensler spoke about “the intersection of crypto assets with derivatives” in his considerably shorter speech. He mentioned:

“If platforms — whether in the decentralized or centralized finance space — offer security-based swaps, they are implicated by the securities laws and must work within our securities regime.”

Gensler burdened the necessity for the ISDA “to recognize that if the underlying asset is a security, the derivative must comply with securities regulations” because it develops authorized requirements for crypto derivatives.