CFTC Chair: Agency Well-Positioned To Regulate Crypto
Rostin Behnam, Chair of the Commodity Future Trading Commission, stated that the CFTC is “well positioned”, to address regulatory gaps in crypto markets.
Behnam prepared remarks for the February 3 American Bar Association event. His stance on cryptocurrencies is unchanged. He stated that he still believes there is a regulatory gap, but the “CFTC” is well-positioned to fill it if Congress grants the agency the authority.
The CFTC Chair stated that the crypto market was “shaken to its core” in 2017 after a series of failures, bankruptcies and collapses that saw approximately $2 trillion of value wiped from the market. This is an indication that comprehensive legislation is needed in the market, he said.
“Regulation is essential to protect customers and prevent financial market failures that cannot be predicted. We must act, regardless of how many happen in 2023 or 2033.
Behnam pointed out that CFTC had brought 69 enforcement actions against digital asset that were believed to be commodities in interstate trade, swaps and other derivatives. He said that these cases accounted more than 20% for the 82 filed last year.
The CFTC Chair stated that they have brought the first enforcement action against a DAO for decentralized finance trading. This is because the DAO offered leveraged and margined retail commodities transactions to the public.
According to reports, Ooki DAO was sued by the CFTC for operating a unregistered cryptocurrency futures trading facility and failing conduct proper know your customer checks in September 2022.
Behnam stated that the budget increase for the commission will also aid in growing its enforcement team. Behnam stated that the team was working towards “another strong year of precedent-setting trials” against illegal or fraudulent digital asset projects.
The CFTC Chair stated that Bitcoin should be treated as a commodity late last year. He said, however, “[Bitcoin is] “Unlike any commodity we’ve dealt with,” admitting that it is difficult to regulate in the current framework.
Behnam, on the other hand, suggested that ETH may not be considered a commodity. US regulators could expect a more aggressive regulatory crackdown on ETH and nearly all altcoins if ETH is deemed a security.
Notable is the fact that in December, the CFTC brought civil charges against FTX and Bankman-Fried as well as Alameda Research, for misappropriating customer funds. The Securities and Exchange Commission, (SEC), and the Justice Department are also investigating Bankman-Fried’s criminal case.