VIDEO: Talking Cryptocurrency and the CFTC with WilmerHale’s Paul Architzel




The dramatic price swings of last year’s bitcoin markets have mellowed. But U.S. agencies are still grappling with how to regulate nascent cryptocurrency technologies as market caps reach into the billions of dollars.

The U.S. Commodity Futures Trading Commission (CFTC) has now proposed new plans for oversight while also encouraging the industry to step up and self-regulate, said Paul Architzel, co-chair of WilmerHale’s Futures and Derivatives Group and former chief counsel of the CFTC's division of economic analysis.

In recent weeks, the agency proposed new guidance to help clarify its authority over the exchanges where investors buy and sell cryptocurrencies. But CFTC commissioner Brian Quintenz is also supporting efforts by the industry to fill oversight gaps with a self-regulatory organization (SRO).

“There’s been the question about how to regulate these markets. And because there’s no government regulation, the concept of self-regulation has been one that’s been floated,” Architzel told Bloomberg Law in a recent video interview.

An SRO is a non-governmental body that creates and enforces industry regulations, such as the Financial Industry Regulatory Authority (FINRA), which licenses securities broker-dealers and imposes fines.

In March, a leading crypto exchange proposed the creation of an SRO for markets to add a layer of protection for investors.

Still, the U.S. government’s fragmented banking and financial regulatory system has led to turf wars over who should regulate what assets in the past, Architzel said. Any regulatory oversight structure for cryptocurrency is far from finished as other U.S. agencies try to shake out responsibilities, Architzel said.

“As an industry matures, there’s probably more opportunity where you’ll have those regulators bump up against each other and more kinds of controversy with regards to who will regulate,” he said.