The Protocol: The CFTC Is Cracking Down on Crypto

DEXES DINGED! Final week, the Commodity Futures Trading Commission charged three decentralized finance (DeFi) platforms – Opyn, Inc., ZeroEx (0x), Inc. and Deridex, Inc. – with acting illegal derivatives trading services. Notably, the CFTC reprimanded the smart-contract based trading platforms for supporting keepsakes that were issued by third-parties. Just a week earlier, a New York court dismissed similar claims against Uniswap in a classification action case, with a judge arguing that the decentralized exchange platform was not accountable for third-party “scam souvenirs” listed to its platform. The CFTC charges were significant in the context of the wider U.S. regulatory landscape. For several years now, the CFTC and Guarantees and Exchange Commission have been in a jurisdictional turf war over who should regulate the U.S. crypto industry. The industry has principally lobbied in favor of oversight by the CFTC, which holds a reputation as the less strict agency, but last week’s quarrelsome CFTC actions drew long-standing assumptions about the regulator into doubt. On the other hand, CFTC Commissioner Caroline Pham did send a relatively crypto-friendly, “time-limited” program last week to pave the way for regulated crypto markets and tokenization.