Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam has stated that U.S. regulators lack the authority to preemptively prevent another major crypto collapse similar to the FTX incident.
Speaking at the Financial Markets Quality Conference 2023 at Georgetown University, Behnam underscored that, despite urging the Senate Banking Committee almost a year ago to swiftly address regulatory concerns, “nothing has changed, and we could be in a position where another FTX type event happens.”
Behnam called on Congress to create a comprehensive regulatory framework for the digital commodity market, stating that the CFTC lacked the authority to regulate it adequately. He noted that the CFTC’s current authority is limited in the direct cash markets, where assets like Bitcoin are traded.
Calling for appropriate authority granted by Congress to prevent future incidents, Behnam highlighted the CFTC’s more extensive oversight in the crypto derivatives sector, where it can assess company registrations and directly supervise behaviors. He also pointed out that the Securities and Exchange Commission (SEC) primarily regulates securities markets. While SEC Chair Gary Gensler considers the majority of crypto tokens as securities, certain cryptocurrencies like Bitcoin and Ethereum fall outside the SEC’s jurisdiction.
Legislative Progress on Crypto Regulation Faces Slowdown as House Votes on Crypto Bills Await
Efforts to expand the Commodity Futures Trading Commission’s (CFTC) jurisdiction over direct cash markets in the crypto space through legislative measures are facing delays in Congress. Although bills have been introduced in the House of Representatives, progress has been sluggish, with some awaiting action after committee approvals. The bills encounter challenges in the Senate, contributing to a perceived “holding pattern” in advancing crypto market-structure legislation.
The legislative agenda in Congress has been dominated by priorities such as maintaining federal government operations, negotiating spending bills, and addressing leadership changes. As a result, bills related to crypto market regulations, including those focused on stablecoin oversight, have experienced delays in reaching the House floor for a vote.
Crypto lobbyists had initially hoped for House floor votes on these bills by the end of the year. However, competing legislative priorities and the complex nature of crypto regulation have led to setbacks.
CFTC Acting Chairman Stresses Need for Regulatory Oversight in Crypto Market Amidst Concerns Over Fraud and Manipulation
Former FTX CEO Sam Bankman-Fried’s recent conviction for defrauding investors, resulting in substantial losses and a dent in market trust, prompted CFTC Chairman Rostin Behnam to emphasize the vital role of regulatory oversight in preventing such events.
Addressing changes in the crypto market dynamics over the past year, Behnam underscored the necessity of robust regulations to safeguard investors and maintain market integrity.
Behnam also delved into the CFTC’s ongoing legal battle with prediction market Kalshi over political outcome betting. The regulatory scrutiny raised questions about the societal value of hedging political risk through contracts based on election outcomes.
Expressing concerns about the CFTC potentially becoming an “election cop” in cases of fraud or manipulation involving election-related futures or derivatives, Behnam clarified his reluctance for the CFTC to assume such a role in U.S. elections.
The post CFTC Chairman: U.S. Regulators Lack Authority to Prevent Another Major Crypto Collapse appeared first on Cryptonews.