US Securities and Exchange Commission (SEC) chairman Jay Clayton will give a wide-ranging account of the regulator’s approach to cryptocurrencies in testimony before the US Senate tomorrow (Feb. 6), according to a copy of his prepared remarks uploaded to the Senate’s website. In his testimony, Clayton singles out cryptocurrency exchanges as targets for potential future regulation.

Clayton will say: ”As [Commodity Futures Trading Commission] Chairman [J. Christopher] Giancarlo and I stated recently, we are open to exploring with Congress, as well as with our federal and state colleagues, whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate. We also are supportive of regulatory and policy efforts to bring clarity and fairness to this space.”

Cryptocurrency exchanges are currently regulated as money-transmission services, with licenses granted on a state-by-state basis. This falls outside the purview of the SEC and the commodities futures regulator, the CFTC. One of the world’s biggest cryptocurrency exchanges, Coinbase, headquartered in San Francisco, has obtained such licenses from 35 US states, the District of Columbia, and Puerto Rico.

The CFTC’s chairman will also stake his agency’s claim over cryptocurrency exchanges in his testimony, highlighting the fact that, although the agency has no regulatory oversight over exchanges, it does have investigatory powers, such as the ability to subpoena exchanges. Bloomberg reported last week that a cryptotoken issuer called Tether received a CFTC subpoena in December, deepening suspicions that the token was propping up bitcoin’s price.

But the CFTC chairman will also underscore the fact that his agency regulates professional traders, not retail investors. He will argue that the CFTC has sufficient authority to protect investors in cryptocurrency derivatives, such as bitcoin futures, and that any extension in its authority over spot exchanges would require legislative amendment. “Such extension of regulatory authority would be a dramatic expansion of the CFTC’s regulatory mission, which currently does not give the CFTC regulatory authority (distinct from enforcement authority) over cash commodity markets,” Giancarlo will testify.

Cryptocurrency industry advocates welcome a replacement to the state system. Coin Center, a Washington, DC-based advocacy group, argues in a new report that expanded federal powers over cryptocurrency exchanges is an opportunity to bring regulations in line with internet businesses. ”Federal oversight could be an opportunity to fix broken state-by-state money transmission licensing,” says Jerry Brito, Coin Center’s executive director. “It depends on how it’s done, but it could be beneficial.”

For crypto investors who have seen their bitcoin holdings plunge in value by some 60% over the last 30 days, such regulatory wrangling will be cold comfort for now. As for which regulator may be preferred by the industry, Coin Center research director Peter Van Valkenburgh offers this somewhat circular argument: “The CFTC would be the more sensible regulator for cryptocurrencies that are not securities.” Well, that clears things up, then.