Both agency heads agreed Congress must consider new cryptocurrency rules.
"The SEC has been slow to respond to this challenge but is now picking up the pace and may accelerate even faster in light of bitcoin's plunge," said John Coffee, a Columbia University law professor and a frequent congressional witness on securities matters.
Coffee points to a number of enforcement actions by the SEC going after companies engaged in Initial Coin Offerings. That's where investors accept a digital coin or token and get an ownership stake in a business or portfolio of managed assets issued by an affiliated marketer of that coin or token.
"Often these tokens amount to securities because they make the investor a passive investor in a business run by the promoter," he said.
The SEC has brought legal action against four companies in the digital currency sector since last July, when it determined that coin offerings were akin to selling stock.
Just a week ago, the SEC launched action against Dallas-based AriseBank, which was trying to raise $600 million from investors toward a goal of $1 billion. Regulators allege AriseBank's public sale began on Dec. 26 with a planned distribution of digital coins to investors on Feb. 10. These coins could be held over time and would hypothetically increase in value and be tradeable on a digital-trading platform.
The SEC determined this all amounted to the sale of unregistered securities, just as if someone with a private oil drilling company was offering shares of the company but failing to register for the authority to offer shares to the public.
A court-approved emergency freeze on AsideBank's assets allowed the SEC to secure cryptocurrencies that included Bitcoin, Litecoin, Bitshares, Dogecoin and BitUSD, the agency said in a statement.
The CFTC normally regulates contracts, called futures, for future delivery of wheat, oil and other commodities. In 2015, it deemed virtual currencies to be a commodity. A year later it went after a bitcoin futures exchange that operated in the United States without CFTC registration. Then last December it allowed two commodity exchanges to begin offering contracts based on the future price of bitcoin.
The CFTC moved last year to shut down a Las Vegas business called My Big Coin Pay Inc., bringing charges of commodity fraud and misappropriation of $6 million. Investors thought they were investing in a digital currency that was back by gold, the agency said. The CFTC said Jan. 24 that it had charged the company with commodity fraud in a federal lawsuit.