Heads of SEC, CFTC and FinCEN Jointly Warn Crypto Industry to Follow RegulationsBy Oct 14, 2019 2 Min Read
The heads of the three major US financial regulators have issued a joint statement warning the cryptocurrency industry to adhere to banking regulations in the development of digital assets.
The joint statement was signed by Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert, Financial Crimes Enforcement Network (FinCEN) Director Kenneth Blanco and Securities and Exchange Commission (SEC) Chairman Jay Clayton. The statement reiterates that digital assets must comply with the various banking and financial services laws already in place in the US, regardless of what they call their cryptocurrencies or tokens—citing the Bank Secrecy Act (BSA) which outlines how financial services must be registered in compliance with regulators.
The details of the statement spoke to the nature of digital asset-related activities, explaining that the “activities a person engages in are a key factor in determining whether and how that person must register with the CFTC, FinCEN, or the SEC.”
The statement further highlights that an ‘exchange’ in a digital assets market may or may not qualify or be categorized as an ‘exchange’ in the federal securities market. Quoted from the joint statement, “Regardless of the label or terminology that market participants may use, or the level or type of technology employed, it is the facts and circumstances underlying an asset, activity or service, including its economic reality and use (whether intended or organically developed or repurposed), that determines the general categorization of an asset, the specific regulatory treatment of the activity involving the asset, and whether the persons involved are ‘financial institutions’ for purposes of the BSA.”
Comments from the SEC
In additional comments, Chairman Jay Clayton, Securities and Exchange Commission (SEC) spoke on the responsibilities of his department stating that “The statutory mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. In general, the SEC has jurisdiction over securities and securities-related conduct. Persons engaged in activities involving digital assets that are securities have registration or other statutory or regulatory obligations under the federal securities laws.”
Clayton concluded, “
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