Two U.S. Commodity Futures Trading Commission (CFTC) appointees, who were featured speakers at the D.C. Blockchain Summit this week, want the Securities and Exchange Commission (SEC) and CFTC to create a framework that would classify digital assets.
The D.C. Blockchain Summit is organized annually by the Digital Chamber of Commerce.
“It’s something that we could do now and it’s something we could do without legislative authority,” said Commissioner Summer Mersinger. “I think it would provide a lot of clarity and some transparency to the market that's not there right now.”
However, the classification of digital assets is unlikely to happen without the hand of a higher authority.
“We would need probably some sort of legislative mandate to force us to sit down, but it's happened before,” Mersinger said. “The agencies have sat down and created rules in order to help classify certain types of swaps that have different backing. It’s not unprecedented, and I think it's something that would greatly help the industry.”
Mersinger was a panelist on Tuesday, discussing "Forward Thinking: Policies Shaping the Digital Asset Markets," along with former capital markets' lawyer Kristin Johnson, who is also a CFTC commissioner.
Ava Labs' general counsel Lee Schneider moderated the fireside chat.
“There is no universally accepted or uniform terminology that effectively encapsulates all that we're trying to talk about when we talk about digital assets,” Johnson said. “It's a shorthand. It's colloquial. It's a shortcut. It's incomplete but we need a vernacular so that we can actually engage in conversation.”
Currently, digital assets are known as crypto assets, virtual assets, virtual currencies, convertible virtual currencies, crypto commodities, digital commodities and tokens.
“When we add language into statutes, part of what we're hoping to do is to create the potential that the language will be living language, that it will be effective," Johnson said. "Not just for today but for future generations to carry out the values that we can collectively agree on as part of our common understanding of markets and market activity.”
Another area of the financial markets that likely will require legislation, or regulation, involves safeguarding and protecting the role of the intermediary, according to Johnson, because being an intermediary places a company in a position of trusted confidence.
“Once you occupy that position of trusted confidence, the social contract that binds us indicates to the rest of us that you'll do certain things,” she said. “You'll be loyal with respect to the money that you've been given to hold. You'll be a fiduciary with respect to that money, which means you'll make good choices about that money. That's one of the foundational principles that make our markets work and makes them work well.”