“[I]n the words of Federalist No. 49, ‘The people are the only legitimate fountain of power, and it is from them that the constitutional charter . . . is derived.' Government is and should be the servant of the people, and it should be fully accountable to them for the actions which it supposedly takes on their behalf.” (H.R. Rep. No. 94-880 (Pt. 1), reprinted in 1976 U.S.C.C.A.N. 2183, 2184).

The case SEC v. Wahi is a striking example of “regulation by enforcement.”  The SEC complaint alleges that dozens of digital assets, including those that could be described as utility tokens and/or certain tokens relating to decentralized autonomous organizations (DAOs), are securities.

The SEC’s allegations could have broad implications beyond this single case, underscoring how critical and urgent it is that regulators work together.  Major questions are best addressed through a transparent process that engages the public to develop appropriate policy with expert input—through notice-and-comment rulemaking pursuant to the Administrative Procedure Act.  Regulatory clarity comes from being out in the open, not in the dark.

Twelve years ago on this day, the Dodd-Frank Act became law.  Since that time, the CFTC has faithfully carried out its expanded anti-fraud mission and has aggressively pursued wrongdoing in every one of our markets and all over the world.  Given the overriding public interest and the open questions on the legal statuses of various digital assets, such as certain utility tokens and DAO-related tokens, the CFTC should use all means available to fulfill its statutory mandate to vigorously enforce the law and uphold the Commodity Exchange Act.  This responsibility has been entrusted to us by the Congress and the American people.  The CFTC must not break that trust, and we must remember whom we serve.