In recent regulatory news, the United States Commodity Futures Trading Commission (CFTC) has rejected a Freedom of Information Act (FOIA) request regarding the subpoenas recently received by Bitfinex and Tether; the United States Securities and Exchanges (SEC) Chairman, Jay Clayton, has indicated that the regulator will not alter existing securities legislation to cater to cryptocurrencies. Maria Vullo, the Superintendent of Financial Services for the State of New York, has praised the regulatory efforts made by the CFTC and SEC in the arena of initial coin offerings, and the SEC has announced Valerie Szczepanik as the commission’s new Senior Advisor for Digital Assets and Innovation.
CFTC Rejects Freedom of Information Request
It has been reported by media that the U.S Commodity Futures Trading Commission has rejected a request under the Freedom of Information Act for access to the subpoenas delivered to Bitfinex and Tether on the 6th of December.
The FOIA request, dated June 5th, requested “subpoenas issued to Ifinex inc. also known as Bitfinex and its subsidiary companies, as well as subpoenas issued Tether Limited and its subsidiary companies.”
The anonymous individual who submitted the request claims that the CFTC responded stating that it had discovered “thousands of responsive records, all of which are exempt from the FOIA’s disclosure requirement,” adding that “Some records are exempt from disclosure under FOIA Exemption 7(A), 5 U.S.C. § 552(b)(7)(A), because disclosure of that material could reasonably be expected to interfere with the conduct of the Commission’s law enforcement activities.”
The CFTC also reportely stated that “Some records were obtained on the condition that the agency keep the source of the information confidential. Those records are exempt from disclosure under FOIA Exemption 7(0), 5 U.S.C. § 552(b)(7)(D). That exemption is intended to ensure that “confidential sources are not lost because of retaliation against the sources for past disclosures or because of the sources’ fear of future disclosures.”
SEC Will Not Modify Securities Regulations to Cater to Cryptocurrencies
In a recent interview with CNBC, the chairman of the U.S Securities and Exchange Commission, Jay Clayton, firmly rejected the suggestion of modifying existing securities legislation in order to adapt regulations to cryptocurrencies. Mr. Clayton stated “We are not going to do any violence to the traditional definition of a security that has worked for a long time. We’ve been doing this a long time, there’s no need to change the definition.”
The SEC chairman also sought to clarify the regulator’s jurisdiction regarding virtual currencies. “Crypto-currencies: These are replacements for sovereign currencies, replace the dollar, the euro, the yen with bitcoin. That type of currency is not a security. A token, a digital asset, where I give you my money and you go off and make a venture, and in return for giving you my money I say ‘you can get a return’ that is a security and we regulate that. We regulate the offering of that security and regulate the trading of that security.”
New York Officials Praise U.S. Authorities for ICO Regulations
At a recent event organized by the Council on Foreign Relations titled “Legal Tender? The Regulation of Cryptocurrencies,” Maria Vullo, the Superintendent of Financial Services for the State of New York, praised the efforts of U.S authorities to regulate initial coin offerings (ICOs).
Mrs. Vullo stated “I think the SEC has done the best job possible in its efforts to regulate token sales,” adding, “in many ways, this is no different than other types of banking-related services where you have the state regulators, you have the public companies that are also regulated by the SEC and the CFTC.”
Mrs. Vullo added “I think a lot of these token sales run afoul of the spirit of the law, if not the letter of the law. But we have to be careful not to lump them all together.”
Valerie Szczepanik Named SEC’s Senior Advisor for Digital Assets
The SEC has announced Valerie Szczepanik as the regulator’s new Senior Advisor for Digital Assets, and Associate Director of the Division of Corporation Finance. Mrs. Szczepanik has worked with the SEC since 1997, most recently serving as an Assistant Director in the Division of Enforcement’s Cyber Unit.
Chairman Jay Clayton stated “Valerie’s thought leadership in this area is recognized both within the Commission and across financial regulators in the United States and abroad. With her demonstrated skill, experience, and keen awareness of the importance of fostering innovation while ensuring investor protection, Val is the right person to coordinate our efforts in this dynamic area that has both promise and risk.”
Ms. Szczepanik stated “I am excited to take on this new role in support of the SEC’s efforts to address digital assets and innovation as it carries out its mission to facilitate capital formation, promote fair, orderly, and efficient markets, and protect investors, particularly Main Street investors. I look forward to working closely with staff across the agency, our regulatory partners, and the public as we provide a coordinated and strategic response to developments.”
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