The CFTC should be the ‘Primary Cop’ for cryptocurrency. Acting Chairman’s Statement
Posted by : Crypstarter Team
Category : Blog, news
Rostin Behnam mentions the agency’s previous enforcement actions.
The Commodity Futures Trading Commission (CFTC), according to its interim head, is ready to be the primary federal regulator for cryptocurrency.
If Congress expands the CFTC’s scope, Rostin Behnam, the acting chairman, told the Senate Agriculture Committee that the commodities regulator is poised to become the lead federal regulator for digital assets.
Behnam was giving testimony as part of his confirmation process for a full term as the agency’s chairman.
“The CFTC has responsibly and aggressively been pursuing enforcement cases in the digital asset marketplace for a number of years now,” Behnam said, pointing to the agency’s recent settlements with crypto exchange Kraken and stablecoin issuer Tether.
The regulator emphasized the scale of the crypto market, adding that it already has a market valuation of $2.7 trillion, with “almost 60%” of that being commodities.
“I think it’s important for this committee to reconsider and consider expanding authority for the CFTC,” Behnam said.
He recognized that regulating crypto would be a “step away” from the agency’s traditional job as a commodities regulator, but he believes the sector is big enough to justify the change.
“Given the size, the scope and the scale of this emerging market, how its interfacing and affecting customers, retail customers, and then with the scale of the growth being so rapid, potential financial stability risks in the future, I think it’s critically important to have a primary cop on the beat and certainly the CFTC is prepared to do that if this committee so wishes,” Behnam said.
Digital asset market transactions, including banking and prudential finance concerns, as well as clearing and settlement risks, were later identified as a danger by Behnam.
“We really also need to have a conversation about market regulation and sort of the exchange, the purchase and sale of these coins in a regulatory structure for both securities and commodities,” he said.
Brewing turf war?
The Securities and Exchange Commission (SEC), the CFTC’s securities counterpart, has also been working to better oversee the crypto market. The SEC has approved new bitcoin futures exchange-traded funds (ETFs) under Chairman Gary Gensler, who entered office earlier this year, increasing retail exposure to the digital asset market.
Gensler has stated that he feels the SEC is best positioned to be the principal regulator of cryptocurrency.
In several public pronouncements, Gensler has stated that the SEC should supervise exchanges like Coinbase because they may offer securities and monitor stablecoins, a portion of the cryptocurrency market in which each token is tethered to a fiat currency such as the dollar. He believes the SEC should also regulate decentralized finance (DeFi), which aims to recreate classic financial instruments and platforms without the use of a centralized authority.
Gensler also stated in a congressional hearing that he believes “most” tokens are securities.
Congress will have to act to clarify the crypto market’s regulation. There is no government regulator for spot crypto markets at the moment. The CFTC is in charge of crypto derivatives markets and fraud in the underlying spot market, whereas the SEC is in charge of securities and platforms that specifically aim to list and trade securities.
The majority of cryptocurrency trading platforms are regulated at the state level, which means they must obtain money transmitter licenses in each state where they do business. Because of the resources required to get over 50 distinct permits, industry groups have criticized this piecemeal approach.
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