Some prominent crypto executives, including FTX CEO Sam Bankman-Fried, are pushing to be regulated by the CFTC, not the SEC, a smaller agency focused on futures
It was a classic Washington networking party. Sam Bankman-Fried, the co-founder and chief executive officer of FTX … Tweets: @smdiehl , @allyversprille , @blakereid , and @smdiehl Tweets: Stephen Diehl / @smdiehl : This is because crypto exchanges are selling illegal securities, that's literally their business model. They're like financial crack dealers. Just to spell it out in explicit terms for those that don't want to read between the lines here. @allyversprille : Firms are pushing to expand the CFTC's role overseeing crypto. For some it's no surprise the push is occurring as the SEC flexes its muscles. “The exchanges are coming to a conclusion that the last thing they want is to be regulated by the SEC.” https://www.bloomberg.com/... Blake E. Reid / @blakereid : web3's speedrun of poorly conceived societal harms is already catching up to web2's “please structure the inevitable regulatory scheme in ways that benefit us” phase https://twitter.com/... Stephen Diehl / @smdiehl : It's like the nations crack dealers getting together and deciding they want to be regulated like a hotdog stand. https://twitter.com/...
Context & Ripple Effects
In early 2022, Sam Bankman-Fried was Washington's most credible crypto ambassador, arguing his industry belonged under the CFTC — a smaller, futures-focused agency — rather than Gary Gensler's SEC. The pitch dovetailed with FTX's product ambitions: its plan to automate risk management in US futures trading and run markets around the clock sat squarely in CFTC territory.
Critics read the venue-shopping as an admission: developer Stephen Diehl argued exchanges were selling illegal securities and wanted the SEC's jurisdiction precisely because it threatened their model. Within months the arc turned — both agencies opened probes into FTX's customer-fund handling (the SEC and CFTC investigations), Gensler faced questions over why the SEC had met with FTX before its implosion (his plan to regulate most crypto as securities), and the SEC sued Bittrex for running an unregistered exchange, naming tokens like Algorand as securities.
First-order effects
- FTX and allied executives gain a live lobbying track to expand CFTC jurisdiction over spot crypto, while the SEC under Gensler continues treating most tokens as securities — leaving every US exchange caught between two regulators with opposite theories of the asset class.
Second-order effects
- Rival exchanges face a fork: pursue the CFTC-friendly futures structure FTX is building toward, or absorb SEC enforcement risk of the kind later visited on Bittrex — making regulatory venue a competitive weapon, not just a compliance question.
Third-order effects
- If the CFTC-first strategy had held, the smaller agency would have become crypto's de facto primary regulator; instead, the post-collapse scrutiny of how both agencies handled FTX turns jurisdictional competition into a structural argument for a single, explicit statutory framework rather than agency-by-agency accommodation.
The trend: Crypto firms are shopping for their preferred regulator, and inter-agency jurisdiction — CFTC versus SEC — has become the decisive battleground over whether digital assets are commodities or securities.