Crypto should regulate itself? Massad and Clayton think so

Maybe the crypto industry should pay for its own regulatory agency, former regulators argue

article-image

Former CFTC Chair Tim Massad | Brookings Institution/"Timothy Massad" (CC license)

share

If crypto companies are so keen on getting clear policy passed, they should focus on ponying up the cash to help fund a regulatory body, not fighting it out in court, former agency heads argue. 

Former CFTC Chair Timothy Massad and former SEC Chair Jay Clayton co-authored an opinion piece in the Wall Street Journal earlier this month. 

Massad and Clayton called for collaboration between the SEC and CFTC to “jointly develop basic investor and market protection standards for trading platforms as they exist today,” their op-ed read.  

“The agencies could act directly or through a self-regulatory organization, shifting funding responsibility to the industry,” the two added. “Having Congress mandate this approach would be even better.”

The current “regulation by enforcement” strategy regulatory agencies, particularly the SEC, seem currently interested in leads to lengthy and expensive litigation. Waiting on court cases to resolve is not an effective strategy for creating policy, Massad and Clayton argue. 

“We also believe that these enforcement actions, in themselves, are unlikely to bring about a significant improvement in investor protection and market integrity quickly,” Massad and Clayton wrote. 

Massad and Clayton’s comments come as lawmakers continue to struggle to get on the same page about crypto regulation, namely when it comes to allocating responsibilities to different agencies. 

The current Digital Asset Market Structure Bill discussion draft, by Republican chairs Patrick McHenry and Glenn Thompson, of the House Financial Services and Agriculture Committees, respectively, attempts to reshuffle power between the SEC and CFTC. 

McHenry and Thompson call for giving control over digital asset spot commodities markets to the CFTC, although this calls into question the process of token classification, which the SEC has lately spearheaded. Some lawmakers have argued that the CFTC would need significantly more funding to achieve the goals laid out in the discussion draft, but the bill does not include anything on agency budget. 

The SEC and CFTC need to be involved in crypto regulation, Massad and Clayton agree, but the industry could fund a new oversight body. 

Similar to how banking and savings institutions fund the Federal Depository Insurance Corporation, crypto firms could be required by Congress to bear the cost of a regulatory agency, Massad and Clayton suggest. 

“It won’t cost taxpayers,” the two added.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (6).png

Research

In recent months, a number of highly accretive developments were implemented across the protocol to improve fee capture, expand product functionality, and ultimately drive value accrual to the RUNE token, with more upgrades on the immediate horizon. These developments include hiking the minimum swap fee parameter to increase revenue, adding a Burn System Income Lever to reduce the RUNE supply, the addition of COSM-WASM smart contracting and IBC to enable an application layer, new chain integrations, and more.

article-image

A blockchain some thought dead in the water two years ago now feels cool

article-image

Former IRS agent and Binance executive Tigran Gambaryan will remain imprisoned in Nigeria’s Kuje prison

article-image

When Permissionless III wraps on Friday, there will be 26 days left until the 2024 presidential election

article-image

Plus, an update from the ground in Salt Lake City at Permissionless III

article-image

The US regulator accused the crypto market-making firm of acting as an unregistered dealer