Former CFTC Chairman Says Crypto Needs Regulation Now

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Timothy Massad, former chairman of the Commodity Futures Trading Commission, spoke to CNBC’s Jim Cramer on Monday and argued for crypto regulation that won’t require years of waiting for litigation to end.

Massad, along with former SEC Chairman Jay Clayton, detailed the theory in The Wall Street Journal last week. They argued that the SEC and the CFTC should jointly create a self-regulatory body that would establish basic standards for asset protection, fraud prevention, conflicts of interest, as well as reporting requirements. and record keeping for any platform that trades bitcoin or ethereum.

“We strongly support law enforcement, but what we are saying is that we need more than that, and the reason is twofold,” Massad said. “The first is that litigation takes a long time and quite frankly the crypto industry may find it in their interest to stretch out these cases as they may be hoping for a change in regulatory attitude with the 2024 election. The second reason is, it won’t solve all the problems we need to solve.”

Massad stressed that these temporary restrictions are necessary while litigation continues indefinitely and the definition of what constitutes security remains opaque.

“We say this is an important question, but put that aside for a moment if you want,” Massad said of the cryptocurrency’s security status. “Let’s not dwell on that, or rather, let’s have a parallel track that says, whatever the question of classification, we need standards today.”

Massad stressed that this regulatory group would be heavily overseen by both the SEC and the CFTC and would not be made up of industry leaders setting standards for themselves. He added that this solution would be a way to put some basic industry standards in place without having to rewrite securities laws.

“Because when you go into rewriting securities laws or derivatives laws, you might create, you know, a lot of unintended consequences, a lot of loopholes that you didn’t want to create,” said Massad. “It’s a way to introduce investor protection standards to the industry as it exists today without having to fundamentally change securities or derivatives laws.”

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