CFTC Chair Requests More Authority Over the Crypto Market

During a hearing before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry on Thursday, September 15th, Rostin Behnam, the chairman of the CFTC expressed his intention to turn his organization into a major crypto regulator. The hearing was about the 2022 Digital Commodities Consumer Protection Act (DCCPA).

Behnam Testifies Before the Senate Committee

Chairman Behnam has been an advocate for more federal regulation of the crypto market and already testified in favor of it last February. The bill discussed today could be a major move to grant the CFTC more oversight over the crypto market while weakening SEC’s authority in the sector.

The head of the CFTC argued that the DCCPA is now more important than ever since the crypto market is both very large, and very volatile. He explained to the committee that the current lack of oversight in the sector makes unprotected customer losses very likely and added that the since last February, the sector saw more than $1 trillion in value wiped out.

Digital asset commodity cash markets have significant speculative retail participation, often use high levels of leverage, and largely rely on platform-based custody arrangements outside of the traditional regulated banking sector.  Many participants in these markets may perceive themselves to be interacting with exchanges and intermediaries structured and regulated like those in other financial markets.  The reality is quite different.  The lack of a comprehensive regulatory regime means that traditional market-based disclosures and bankruptcy protections are frequently absent, and disruptions involving trade settlement, conflicts of interest, data reporting, and cybersecurity resulting in unprotected customer losses are more likely.

Chairman Behnam’s testimony

The Chairman also stated that the CFTC has been hard at work conducting digital asset enforcement despite the difficulties his organization has been facing due to the lack of a proper legislative framework. The Comotidy Futures Trading Commission has mostly been relying on complaints and tips received from the public when dealing with the crypto markets.

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The Fight to Regulate Crypto

While CFTC has been vocal in its intention to regulate the crypto market, it hasn’t been the only agency to do so. The SEC has also been very active in digital asset enforcement throughout 2022 in accordance with its Chairman’s views that DeFi and crypto regulation should be given high priority.

The SEC however isn’t the obvious leader when it comes to crypto enforcement despite its numerous complaints targeting the sector. CFTC has had its fair share of cases over the past few years. Probably the most notable action of Chairman Behnam has been the $1.7 billion suit against Mirror Trading for Bitcoin-related fraud.

More recently, crypto companies have begun organizing themselves in a bid to have a louder voice when it comes to digital asset regulation. Earlier this week, an association of major firms within the sector announced the creation of its own political action committee hoping it will bring more crypto-friendly lawmakers into office.

Do you think the digital assets sector would benefit from more CFTC oversight? Let us know in the comments below.