When you have a hammer, everything looks like a nail. That’s why everyone in Washington seems to think that federal financial-services regulators are the natural overseers of crypto trading. This is wrong. Crypto trading should be regulated for what it is—a form of gambling that emulates finance—and not what its advocates tell you it is.
That means the separated crypto-trading system should be excluded from financial-services regulation by the Securities and Exchange Commission, the Commodity Futures Trading Commission, banking agencies, and the Consumer Financial Protection Bureau. Consumers won’t go unprotected. State laws specifically regulating crypto activities, such as New York’s bit license law, will still apply, as will state fraud and consumer protection laws. The Federal Trade Commission’s jurisdiction over any unfair and deceptive advertising or other practices crypto traders and their enablers engage in won’t be affected. Where these laws prove inadequate, state legislatures and Congress can add targeted consumer protections specific to crypto trading. Expanding the reach of state gambling laws to cover crypto trading is also a possibility.
‘Enforcement 40’ for 2020
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