United States congressman Darren Soto has said that most cryptocurrencies should not be regulated under the country’s securities regulator. Soto made his comments in an interview with financial news channel Cheddar on Jan. 10.
According to Soto, crypto should be overseen by the Commodities and Futures Trading Commission (CFTC) and Federal Trade Commission (FTC) — rather than classed as securities under the Securities and Exchange Commission (SEC)’s charge.
Soto, a Democrat, is a member of the U.S. House of Representatives for the 9th District of Florida, and spearheaded a bipartisan effort together with congressman Ted Budd this winter to promote a robust and crypto-friendly regulatory environment in the country.
Advocating for the need to establish agencies’ jurisdiction with more clarity and to create fine-grained classifications for cryptocurrencies, the congressman argued that applying federal securities laws “can be very intense and hurt the market unless it is truly a security.”
He then outlined:
“We’ll be saving the SEC for true securities, knowing predominantly that these are commodities and currency transactions. The [CFTC and FTC] are agencies with a lighter touch and we have grown consensus among the industry that they’d be appropriate for the majority of these types of cryptocurrency transactions and the nature of these assets."
Soto made his case against heavy-handed regulation with the view to maintain the United States’ global competitiveness — acknowledging the proactive efforts to foster the crypto industry in countries such as Malta and Barbados. Soto remarked:
“We have sometimes taken for granted that the U.S. dollar is the foundation of the world economy, and how that creates stability and advantage […] As cryptocurrency becomes more utilized, that advantage could go away… [we] need to make sure we are aggressive and a fertile place for cryptocurrency transactions and for technology companies to be here.”
Since the U.S. does not currently have any singular regulatory body that oversees crypto regulation, regulators have long debated whether it is more accurate to align virtual currencies with commodities or securities.
The CFTC has determined some major cryptocurrencies to be commodities — most notably, Bitcoin (BTC).
Meanwhile, several prominent U.S. regulators have contended that most tokens sold via initial coin offerings (ICO) are to be deemed securities, bringing them under the purview of the SEC’s jurisdiction. According to the 70 year old Howey Test, a security involves the investment of money in a common enterprise, in which the investor expects profits primarily from others' efforts.
The Internal Revenue Service has for its part advised that for federal tax purposes, it has decided to treat cryptocurrencies as property.