CFTC Commissioner Summer Mersigner discusses the inevitability of innovation and clarifies the agency’s role in regulating bitcoin.
In light of recent events, many in the Bitcoin community are seeking regulatory clarity now more than ever. Questions like “who should regulate Bitcoin?” and “Will the US allow Bitcoin innovation or pursue a central bank digital currency (CBDC)?” They are at the top of the list.
To learn more about the regulatory landscape for Bitcoin-focused companies, I sat down with Summer Mersinger, the Commissioner of the Commodity Futures Trading Commission (CFTC), to get her thoughts on these topics and more. To better understand her perspective, we started with a short review exploring her personal interest in Bitcoin. This is vital to the conversation because before commissioners can contribute meaningful policy to the Bitcoin space, Bitcoin must be understood.
Mersinger has been serving on the CFTC since 2022 after being appointed by President Biden and confirmed by the United States Senate. He received his undergraduate degree from the University of Minnesota and later earned a law degree from Columbus Law School in Washington, DC. Since then, he has spent more than 20 years on Capitol Hill in a variety of capacities. These range from working as an aide to South Dakota Sen. John Thune to advocating for fintech organizations as a senior vice president at lobbying firm Smith-Free Group.
When she’s off the clock, Mersinger spends time with her husband and four children; two teenage daughters and two elementary school sons. She describes herself as a huge animal lover, which stems from having been raised on a farm. She said that she was always surrounded by animals, and it is a habit that continues to this day.
Below are his thoughts on a variety of Bitcoin-related topics.
How did you first learn about Bitcoin and what specifically drew you to it?
Although I can’t remember the exact moment I first learned about Bitcoin, I can say that what appealed to me was the technology involved.
The CFTC, where I serve, regulates the trading of derivative products used for pricing and risk management purposes. The CFTC is a technology neutral regulator, which means that, in practice, we do not consider any technology to be better than any other technology. And it is true that, as regulators, we are sometimes skeptical of the new and the unknown.
But a big part of our job is to make sure that all existing and emerging technologies can compete on a level playing field. Our governing statute, the Commodity Exchange Act, specifically identifies that one of its purposes is to promote responsible innovation and fair competition. In light of the opportunities that innovative and revolutionary blockchain technology presents for the derivatives markets we regulate, my focus is on ensuring that we at the CFTC take that mission seriously.
Why do you think it is important for Bitcoin to be regulated by the CFTC as a commodity?
This is one of my favorite questions to answer because it provides an opportunity to clear up a common misconception.
The CFTC is a regulator of the commodity futures market (along with other types of derivatives), not of the commodity itself. I often use the example of cattle markets to explain the meaning of this distinction. The CFTC has regulatory oversight with respect to cattle futures contracts traded on our registered exchanges to provide price discovery and hedging opportunities with respect to cattle in the US. We are knowledgeable and well-equipped to oversee the futures markets cattle.
However, we are not knowledgeable or well-equipped to monitor livestock as a commodity. Livestock auction houses and stockyards are best left to the experts at the US Department of Agriculture.
Understanding the distinction between commodity futures markets and the underlying commodity market is critical to understanding the current regulatory environment for digital assets, such as bitcoin. As it stands now, like all other commodities, the CFTC regulates the trading of bitcoin futures contracts. But the CFTC does not regulate bitcoin itself or the bitcoin spot markets, which are similar to the cattle auction houses and cattle pens in my cattle example. Unlike my cattle example, there is currently no federal bitcoin regulator or bitcoin spot markets.
It is true that the CFTC currently has authority to enforce allegations of fraud and manipulation in the commodity markets. With that authority, our agency has the ability to bring charges against fraud and manipulation in the buying and selling of bitcoin. However, that authority is exercised after the fact. By the time we act, the fraud and/or manipulation has already occurred. I believe that filling the gap in federal oversight of commodity markets for digital assets, such as bitcoin, is a task best left to the legislative process through the authority of Congress.
How do you normally respond to those who disdain Bitcoin?
Whether you accept or dismiss the utility of Bitcoin, it’s hard to argue against the benefits of blockchain technology. These benefits go well beyond cryptocurrencies, and whether or not you become a Bitcoin adopter, I believe the underlying technology will have a positive impact on society.
In the world of derivatives, we have seen this scenario before. For decades, nearly all commodity futures trading was done via “open clamor.” That is, the traders would be literally yelling (hence the term “open protest”) and gesturing wildly, and to consummate the trades, they would write them down on pieces of paper. The pits were hot, noisy, and chaotic, but this was the only way most CFTC-regulated products were traded.
Today we have electronic markets. Legislative and regulatory changes of just over 20 years ago allowed electronic marketplaces to develop alongside yelling and competing marketplaces. At first, the established scheme was dominant, then the two forms of commerce coexisted, and finally the more efficient technology gained widespread adoption.
Therefore, we simply need to look back on our history to see that we have successfully enabled substantial technological innovations in the past, which over time have made our regulated derivatives markets more efficient. I think we are approaching a similar tipping point for blockchain technology.
In your opinion, why is it important to close the gender gap in interest and adoption of Bitcoin?
We need to close the gender gap everywhere, both in Bitcoin interest and adoption and in traditional finance. With a population roughly 50/50 divided between men and women, all sectors of the economy should logically reflect an even division. If not, there is clearly an opportunity to do better. Staying focused around the underlying blockchain technology, I am very concerned about the gender gap within the field of science and technology. There is no reason for this gap to exist and we have to ask why it exists.
Again, with a mostly evenly divided population, unequal participation of one gender is most likely a symptom of a more serious underlying condition. Looking back once again at the history of “open clamor” in the derivatives markets, it took several decades before the first woman traded futures in the pits during the 1960s. We can, and must, do better this time.
This is a guest post by Becca Bratcher. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
