SEC Chair Gensler Aims for CFTC Collaboration to Oversee Cryptos

Key Insights:

• Gary Gensler, the SEC Chair, was back in the news as the battle to oversee the digital asset market intensified.
• In recent months, lawmakers have not only questioned SEC tactics but also sided with the CFTC to regulate the space.
• On Friday, Gensler talked to the FT about his plans to work with the CFTC to ensure both agencies deliver the regulatory oversight to protect investors.

Earlier this month, we discussed a likely battle between the US Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC).

The US agencies are vying for the responsibility to regulate the digital asset market, which is currently in its nascency compared with other asset classes.

Winning approval to regulate the digital asset market would be a feather in the cap for either agency. While currently worth less than $1 trillion, the evolution of Web3 and recovery from the crypto winter could eventually see the digital asset space sit alongside the US equities and commodities markets.

Lawmakers would also have to give the SEC or the CFTC the necessary budget to deliver the regulatory framework and oversight capabilities.

Until now, SEC Gary Gensler has taken a tough stance on the crypto market. Some lawmakers even contacted the SEC chair, questioning his tactics and how the SEC approach could stifle innovation.

Consequently, the CFTC has the upper hand in receiving the authority to regulate the digital asset market.

SEC’s Gensler Talks About Working with the CFTC to Regulate Cryptos

On Friday, SEC Chair Gary Gensler spoke to the FT about digital assets and regulatory oversight.

According to the FT, Gensler aims to form an alliance with other financial agencies to ensure that crypto platforms don’t fall through the regulatory cracks.

Gensler is reportedly talking with the CFTC about an agreement to ensure that crypto trading has the appropriate safeguards and transparency.

The latest Gary Gansler move follows the introduction of the Lummis and Gillibrand bill that looks to give the CFTC sweeping powers to oversee the digital asset space.

The successful passage of the bipartisan bill would materially reduce the SEC’s powers over the digital asset space.

Gensler said,

“I’m talking about one rule book on the exchange that protects all trading regardless of the pair – (be it) a security token versus security token, security token versus commodity token, commodity token versus commodity token to protect investors against fraud, front-running, manipulation as well as providing transparency over order books.”

The SEC is currently in a long-lasting battle with Ripple over the XRP and whether XRP is a security.

For the crypto market, the SEC, and the CFTC, the outcome of the SEC’s case against Ripple Lab could decide who oversees the space.

The SEC Chair has frequently vocalized the view that cryptos should fall under the SEC. However, CFTC Commissioner Summer Mersinger thinks otherwise.

This month, Commodity Futures Trading Commission (CFTC) Commissioner Summer Mersinger reportedly said that US lawmakers and crypto developers were looking to place the authority to regulate digital assets with the CFTC.

Currently, the CFTC regulates the crypto futures, which are limited to Bitcoin (BTC) and Ethereum (ETH) futures.

The decision on who oversees the digital asset space could have a material bearing on the sector.

Bitcoin (BTC) Price Action

At the time of writing, bitcoin (BTC) was down 0.09% to $21,200.

A range-bound start to the day saw BTC fall to an early low of $21,116 before striking a high of $21,363.

Bitcoin left the Major Support and Resistance Levels untested early on.

Technical Indicators

Avoiding the $21,152 pivot would test Friday’s high of $21,529 and the First Major Resistance Level at $21,596.

BTC would need plenty of support to move through to $21,500.

An extended rally would test the Second Major Resistance Level at $21,965 and resistance at $22,500. The Third Major Resistance Level sits at $22,779.

A fall through the pivot would bring the First Major Support Level at $20,779 into play. In case of another extended sell-off, bitcoin could test the Second Major Support Level at $20,342 and support at $20,000.

The Third Major Support Level sits at $19,531.

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Bitcoin sat on the 50-day EMA, currently at $21,118. Today, the 50-day EMA narrowed to the 100-day EMA. The 100-day EMA eased back from the 200-day EMA, bitcoin price negative.

Another bitcoin pullback from the 50-day EMA would test support at $20,000.

A move through to $22,500 would bring the 100-day EMA, currently at $22,800, into play. A breakout from the 100-day EMA would then support a run at $25,000.