The Federal Reserve announced a cryptocurrency meeting, quickly followed by a joint announcement from the SEC and CFTC. This rapid succession of events underscores cryptocurrencies’ increasing significance for US regulators. This sudden shift in focus wasn’t anticipated after President Trump’s election. The primary question is, what purpose does the joint meeting between SEC and CFTC serve?
SEC, CFTC, and Cryptocurrency Regulations
As of the article’s preparation, US stock exchanges have opened positively, with discussions around a potential 50bp rate cut by the Fed. The employment report was as dismal as expected, and following its inflation-focused policies, the Fed now seems compelled to address employment issues with swift rate cuts.
Additionally, positive developments are taking place. As previously mentioned, the Securities and Exchange Commission and the Commodity Futures Trading Commission announced a meeting focused on cryptocurrencies. The roundtable, set for September 29, is organized to provide the much-needed clarity for the cryptocurrency markets.
SEC Chairman Paul S. Atkins and CFTC Acting Chairman Caroline D. Pham highlighted the following in their joint statement:
“It marks the dawn of a new day at the SEC and CFTC as we embark on a long-awaited journey to provide the markets with the clarity they deserve. By working together, our institutions can transform the country’s unique regulatory landscape into a powerful advantage for market participants, investors, and all Americans.
Within the scope of existing statutes, our institutions should strive to harmonize product and mechanism definitions, streamline reporting and data standards, align capital and margin frameworks, and potentially establish coordinated innovation waivers utilizing each agency’s current exemption authority.”
The meeting, which will be streamed live on the SEC’s website, will serve as a foundation for both agencies to develop skills in formulating cryptocurrency rules and to lay groundwork for supportive regulations.
Pre and Post-Trump Dynamics
Before Trump took office, the Biden administration’s stance on cryptocurrencies was anything but favorable. Their aversion was so pronounced that even during the elections, Trump took steps favorable to cryptocurrencies, whereas Harris showed no inclination to do the same. Notably, market excitement over rumors of Harris attending a crypto event was swiftly dashed, highlighting their avoidance.
The Biden administration’s distaste for cryptocurrencies led to regulatory pressure through various agencies. While the SEC pursued legal actions, the CFTC refrained from drafting constructive rules, resulting in a coordinated regulatory approach against cryptocurrencies.
In contrast, post-Trump, both agencies are now collaborating on constructive cryptocurrency regulations. This dramatic 180-degree shift is undoubtedly impressive.
