Chairman of the Commodities futures Trading Commission (CFTC) Rostin Behnam has called for legislation to regulate crypto at the federal level.
The call came two weeks after the securities and exchange commission (SEC) approved the first batch of spot Bitcoin ETFs in the U.S. Behnam expressed fears that the approval of spot bitcoin ETF products introduces risks, and reiterated the need for federal laws to regulate crypto.
“I fear that the regulatory approval of bitcoin ETPs introduces risk that, in spite of yellow flags, market participants, retail and institutional alike, may mistake the technical approval of a product—with actual regulatory oversight of the cash commodity digital assets,” Behnam said on Friday in prepared remarks at an American Bar Association event.
Behman has been in support of special legislation to specifically regulate crypto, which according to him is a unique asset class. Up to this point however, no federal regulator has been granted authority by Congress over the cash markets for digital assets, Behnam said.
Although lawmakers have been working on drafting a bill for some time now to empower federal agencies such as the CFTC the power to watch over the industry, it is yet to become a reality.
“The concerns I have publicly voiced for the better part of six years regarding the digital asset commodity spot market have only become magnified,” Behnam said. “The need for federal legislation over cash market digital assets has never been more critical, and I will continue my call for action,” he added.
Behnam further stated that there is currently no legislation tailored towards crypto to “address the opaque and inconsistent practices in the cash markets for digital assets” around issues like conflicts of interest and customer protections.
“Instead, the ETPs have taken a speculative and volatile asset, wrapped it in a thin layer of indirect regulation, and packaged it as a shiny new product,” he further stated.
The Role of CFTC
In spite of non-existent laws around crypto regulation, the CFTC has continued to play its own role towards ensuring that the crypto space is kept safe for investors. It has been involved in its own enforcement actions, being the “premier enforcement agency in the space” in 2023.
In 2023, the agency brought 47 digital asset-related actions out of 96 in total in fiscal year 2023, including former FTX CEO Sam Bankman-Fried, crypto exchange Binance and its CEO Changpeng Zhao, and Celsius and its former CEO Alex Mashinsky.
“As everyone in this room knows, we can only act on digital asset fraud or manipulation when we uncover or discover anomalies through regulated market surveillance and oversight, or through tips and complaints we can pursue,” Behnam said. “We are doing all this—and making the headlines—with a restrictor plate installed,” Behnam added. “Imagine what we could do if we were given the tools to open up the throttle?”
Behnam’s Stance on Crypto
While Behnam is calling for the regulation of cryptocurrencies, he isn’t exactly working against crypto. In fact, his push for crypto regulation is good for the industry, something the SEC doesn’t want to happen.
The SEC chair Gary Gensler has repeatedly stated that there is sufficient regulation for the industry. Unfortunately, this is what has hindered the growth of the industry, and the industry looks forward to when Behman’s call will be answered.