CFTC a Natural Fit For Regulation: Solana Policy Institute's President

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00:00And actually, quite a few things have been going on in Washington over the last few days in the

00:03crypto space, despite the shutdown. But let's first start on this potential shift to the CFTC,

00:09something I know the crypto industry, Kristen, I think has been asking for.

00:14Yeah, well, I think what the crypto industry has been asking for is they want clarity around

00:18regulation. And during the prior administration, there was a lot of litigation, a lot of regulation

00:23by enforcement that led to a lot of uncertainty. And what Congress is working on now is a framework

00:29for how to regulate this. And one sort of school of thought has always been that the CFTC could be

00:35a very natural home for the regulation of crypto spot markets. And we did see partial draft legislation

00:42that was released by a bipartisan pair of senators on the Senate Agriculture Committee yesterday.

00:50This does lay out a framework for crypto to be regulated at the CFTC. But it does leave some

00:55important parts of the bill blank. They call them brackets in D.C. So there's more work to do on

01:00some of the critical issues. But I think it's a really important step. And now that we have this

01:05language, it can be worked on with the Senate Banking Committee.

01:08Are you hopeful that that will actually get done in any sort of reasonable amount of time, given

01:12all of the other issues that this Congress is going to have to address when they finally reopen?

01:17Yeah, well, Congress obviously has a lot on their plate right now. I think it's more important

01:22that Congress take their time and get this legislation right than get it done quickly and

01:27get it wrong. And so I do think there is a possibility that these bills be marked up at

01:33the committee level before the end of the year. But I think this is a debate that is going to go on

01:38into next year. There are some significant differences right now between the committees of

01:42jurisdiction, between Republicans and Democrats, between the House and the Senate. So there's a lot

01:46of work to do. But I was in meetings last week, and they are going to be continuing to work on this

01:52and moving the ball forward, even if it takes some time.

01:55And we were remiss in not pointing out that CFTC is still basically without a leader,

02:00a permanent leader. I mean, obviously, they have Caroline Pham there as the acting chair,

02:04but she's basically a holdover from the previous administration. Do we think we're going to see

02:08any sort of movement on Michael Selig's nomination to actually lead the CFTC?

02:13Yes, actually, the Senate Agriculture Committee, which oversees the CFTC, just announced today that

02:19they have a hearing for Mike Selig to move forward on the calendar. And so that's happening. But I do

02:26think one of the other things that we will need is Republican and Democratic commissioners, because

02:31if you recall, the CFTC is a five-person commission. Right now, it's one. Getting Mike in

02:36will be one to replace Caroline, but we still need four more. And so you have to have people there.

02:41You have to have leadership. You cannot pass a law and hand it over to a commission that doesn't

02:46have leadership. And so I think that that is something that hopefully will be happening quickly,

02:51but it does take some time to get these nominees vetted and get them voted on in the Senate before

02:55they're able to take their places at the heads of the agencies. You know, Kristen, there was also

03:00some interesting developments coming out of this couple of the agencies, including the IRS,

03:04with regards to crypto exchange traded products. And I am curious about this idea as we start to see

03:13more regulation or lack thereof, or just more rules of formal rules in this space here. How much

03:19further along are we in that process with regards to the tax issues that the IRS and Treasury have to

03:25address? I mean, I think there's more work to be done. We were very excited this week. As you know,

03:30earlier this month, there were several exchange traded products for cryptocurrencies like Solana

03:36that came online despite the shutdown. And I think what we saw was the IRS provided the

03:41complimentary tax guidance that enables more institutions to jump in and invest in these

03:46products. That being said, Congress has held several hearings about doing a more comprehensive tax

03:52package. And I do think there are some issues that the IRS can act on unilaterally without new

03:59authority or direction from Congress. And so, you know, at Solana Policy Institute, we're continuing

04:04to work on both of those paths, the legislative and directly with the IRS. And hopefully we can

04:10continue to get this clarity. We've come so far in the past year, there has been a tremendous amount

04:14of work that's been done with the Genius Act and other types of clarity, but there is more work to do.

04:19And so getting the government back open and getting the, you know, rank and file staff of the SEC

04:25and the IRS back to work is incredibly important in the policymaking process going forward. And so

04:30we were very excited, I think, as a crypto industry to see that the government shutdown is nearly over

04:37and then we can get our federal workers back to work.

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