Legislation intended to provide clarity on which U.S. government agency should be in charge of regulating crypto needs more work, according to Grant Fondo, a former federal prosecutor for the Northern District of California.
Fondo, who is now a partner at the law firm of Goodwin Procter, told CoinDesk TV’s “First Mover" program Monday that although the bill could prove to be significant, “it’s still pretty vague.”
He said there are no clear boundaries between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission on regulating digital assets.
“Do I think it will end the uncertainty? Not totally, at all,” Fondo said of the Senate's bill.
Fondo’s comments follow the push from key U.S. senators to give crypto market oversight to the CFTC, the commodities regulator. The bill, however, is vague on defining whether tokens are considered securities or commodities. Securities are overseen by the SEC.
The bill describes bitcoin (BTC) and ether (ETH) as commodities that would fall under the CFTC’s jurisdiction, and so it does provide some regulatory clarity, Fondo said.
“I think it helps to potentially, should it get enacted, provide some certainty as to bitcoin and ether,” he said. The two cryptocurrencies make up over 50% of the market’s volume, he added.
Should the bill move forward, boundaries setting which agency regulates what will still need to be created. As for defining who regulates other tokens besides BTC and ETH, Fondo said it would be wise for altcoin issuers to “assume the SEC will actively potentially police” them, should the SEC get that power.
SEC Chairman Gary Gensler has said his agency already has the power to regulate most tokens, which he says fit the legal definition of securities.
When it comes to non-fungible tokens (NFT), Fondo says those digital assets fall into a “different bucket,” noting the “SEC has made statements that they’re not securities.”
If NFTs begin to be offered as “traditional financial products” rather than as “pieces of art,” the CFTC could be prompted to step in, Fondo said.
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