Former CFTC Chief: Memecoins Should Fall Under CFTC Jurisdiction

The regulatory landscape for memecoins, a type of cryptocurrency often inspired by internet memes or trends, has been a contentious issue in recent months. As US regulators debate which agency should oversee this sector, a former chief attorney at the Commodity Futures Trading Commission (CFTC) has weighed in on the matter.

Elizabeth Davis, a partner at the law firm Davis Wright Tremaine and a former CFTC chief trial attorney, believes that the CFTC is well-positioned to regulate memecoins. She argues that the CFTC's focus on protecting market participants from fraud and manipulation makes it the right authority to oversee this controversial sector. Davis told Cointelegraph that the CFTC's broad interpretation of a commodity under the Commodity Exchange Act would likely encompass memecoins, allowing the agency to prevent fraud or manipulation in connection with these products.

The chances of the CFTC regulating memecoins will depend on how the broader regulatory framework for digital assets plays out, according to Davis. If the CFTC gains jurisdiction over spot crypto, as current trends suggest, then the chances of memecoins being included in its regulatory purview are pretty good. Davis also expressed confidence that US regulators would likely clarify the regulatory status of memecoins within the coming year.

Davis highlighted the ongoing disagreement between the SEC and the CFTC regarding which agency should regulate the memecoin market. This disagreement, she argues, demonstrates the problems and confusion that arise from the lack of a clear regulatory framework for digital assets. The CFTC has taken an expansive view of its jurisdictional mandate over digital assets, while the SEC has maintained that memecoins fall outside of its purview.

As investors continue to record losses from memecoin investments, many in the community have called on regulators to take the situation under control. Zak Folkman, co-founder of the Trump family's crypto venture, World Liberty Financial, criticized investors for taking a careless approach to memecoin investments. He warned that risking one's entire life savings on a memecoin could be a foolish decision.

Meanwhile, local reports in Argentina suggested that the US Department of Justice has launched an investigation into the Libra token, which was endorsed by Argentine President Javier Milei. This development comes amid ongoing concerns about the lack of legal clarity surrounding memecoins and the potential risks they pose to investors.