CFTC’s Regulation by Enforcement Needs to Change, Commissioner Says
Holding decentralized autonomous organizations (DAOs) accountable is “tough” when there isn’t one figure at the helm and the rules need to be set by Congress, Summer K. Mersinger, a commissioner on the Commodity Futures Trading Commission, said on CoinDesk TV’s “First Mover” on Wednesday.
She was speaking in reference to a case the CFTC is handling that involves Ooki DAO, a lending platform that is governed by a community, and its predecessor company, bZeroX, and bZeroX's co-founders, Tom Bean and Kyle Kistner.
On Sept. 22, the CFTC sued Ooki DAO for allegedly offering leverage and margin trading without registering with the agency or keeping a know-your-customer framework in place and simultaneously settled with bZeroX and its founders for allegedly engaging in the same practices.
Mersinger said the CFTC could have used a “public forum” instead of jumping straight to an enforcement action to discuss how to hold DAOs accountable.
“Before we do that, we need to have some notice to the public and encourage some public input,” Mersinger said. Earlier this week, the CFTC served a summons to Ooki DAO online with a help bot and on a forum post.
It could be useful to have a regime in place that would essentially help DAOs register with the CFTC, Mersinger said. But at the present, “they wouldn’t fit within our framework,” she said, explaining the difficulty someone from Ooki DAO would have if he were to register with the agency.
“We [have] to change our framework and allow for registration,” Mersinger said.
More broadly, she said, Congress must set some rules on regulation.
"Without more clarity in the laws without some sort of statutory change, we're going to continue to see any kind of regulatory-related regulatory framework on the federal level in digital assets coming out of enforcement decisions in court decisions," Mersinger said. "Unfortunately, that bypasses kind of the public legislative process, the public input and it's not an ideal way to govern.
“We want to make sure we are holding people accountable,” Mersinger said. “The trouble here is we’ve got a novel area where it wasn’t a person or a few persons that were involved.
“When you go after the DAO, you don’t necessarily know who to hold accountable,” she added.