CFTC Chairman Rostin Behnam Urges Congress for Regulatory Action on Digital Commodity Markets

Rostin Behnam, the Chairman of the Commodity Futures Trading Commission (CFTC), recently urged the U.S. House Committee on Agriculture to take legislative action to regulate the digital commodity market. Testifying at the Committee’s “Future of Digital Assets” hearing, he expressed the need to protect customers and ensure market resilience and stability in the face of growing volatility.

This call follows the Financial Stability Oversight Council’s landmark report last year, which highlighted financial stability risks associated with the digital asset market. The council recommended Congressional action to fill the regulatory gap, particularly over the spot market for digital assets that are not securities.

Behnam highlighted the pressing nature of these recommendations in the wake of events such as the bankruptcy of multiple digital asset platforms and alleged manipulative trading practices that undermined market confidence. He also drew attention to recurrent cybersecurity vulnerabilities that led to billions in lost funds.

Referencing the 2008 financial crisis, Behnam proposed that similar principles of market regulation – transparency, reporting, and registration – be applied to the digital commodity market. He stressed the need for rules focused on customer asset protection, trading activity surveillance, and the enforcement of stringent cybersecurity standards.

The chairman listed several key regulatory provisions, including robust customer protections, market integrity assurance, and adequate funding for regulation enforcement. He also highlighted the unique role of the CFTC in this process, emphasizing that it should be fully empowered to require necessary risk and operational disclosures from registered entities.

Behnam underscored that the new legislation must not undermine existing laws, particularly where securities laws apply. He further stressed that the CFTC’s authority in the spot market for digital commodities is presently limited to acting only after fraud has occurred, suggesting that it should be empowered to proactively establish rules to prevent fraud.

Finally, Behnam noted the CFTC’s unique funding structure, being the only financial market regulator that relies on Congress for funding. He urged Congress to provide the necessary resources for any new authority, as managing the digital commodity market within the current regulatory framework and resources would be challenging.

Behnam concluded his testimony by expressing optimism in the Committee’s efforts to address gaps in digital asset regulation and committed to working alongside the Committee and Congress members on the legislative proposal.


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CFTC Chair Suggests Ether is Commodity, Let Congress to Regulate Crypto

Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam on Monday tried to dispel the narrative of a turf war over digital assets regulation between his agency and the Securities and Exchange Commission (SEC).

Speaking at a Rutgers Law and Wall Street Blockchain Alliance event in Manhattan, Behnam said: “It’s a pretty cynical view to suggest two agencies can’t figure it out and work together.” He said the remarks to an audience of industry leaders and attorneys.

While US lawmakers’ efforts to pass significant crypto legislation by the end of the year are unlikely, the regulators have engaged in a series of public talks and enforcement actions as to where authority lies. In particular, the questions of which regulatory body should be responsible for crypto oversight and which cryptocurrencies are commodities have created a perception of division between the SEC and the CFTC.

With this regard, Behnam on Monday reiterated his belief that the two largest cryptocurrencies—Bitcoin and Ether—are commodities. Behnam said: “Ether, I’ve suggested that it’s a commodity, I know Chairman Gensler thinks otherwise — or at least hasn’t certainly declared one or the other.”

In the past, SEC Chair Gary Gensler raised questions over whether Ether should fall under SEC jurisdiction – saying that Ether is a security – because of its shift to a proof-of-stake consensus mechanism.

Behnam further said while the SEC and CFTC are both members of the Financial Stability Oversight Council, the council is not the right place to figure out the details of how the two agencies are going to split up crypto oversight responsibilities. He instead said Congress is the right entity to set such boundaries.

In September, Gensler reiterated his continued belief that cryptocurrencies are securities but said he would support Congress giving oversight for the industry to the CFTC.

Gensler’s key argument is that cryptocurrencies are securities. Last month, the SEC chair said that most digital tokens are similar to securities because the underlying companies or groups are run by entrepreneurs looking to attract public investors.

Image source: Shutterstock


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Bitcoin Could ‘Double in Price’ Under CFTC Regulation, Says Chairman Behnam

Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam said Wednesday that regulations oversight under the CFTC could have significant benefits for the crypto sector, including a potential boost to Bitcoin price.


“Growth might occur if we have a well-regulated space. Bitcoin might double in price if there’s a CFTC-regulated market,” Behnam told attendees during a fireside chat at NYU School of Law.

Behnam said a clear regulatory framework could pave the way for institutional investors to enter the market.

“These incumbent institutions in the crypto space see a massive opportunity for institutional inflows that will only occur if there’s a regulatory structure around these markets. Non-bank [crypto] institutions thrive on regulation, they thrive on regulatory certainty, and they thrive on a level playing field. And they may say otherwise,” Behnam further elaborated.

Behnam stated that he supports the bipartisan bill introduced by the leaders of the Senate Agriculture Committee, which would grant the CFTC the primary regulator for the crypto industry.

The executive also supported a bill provision allowing the cash-strapped agency to levy fees on regulated institutions. Behnam considers such fundraising efforts as crucial if CFTC is to tackle the challenge of regulating the crypto industry. The executive pointed out that the agency’s small operating budget has impacted its ability to deal effectively with crypto crimes.

A bipartisan bill recently sponsored by the Senate Agriculture Committee supports the need to give the CFTC “exclusive jurisdiction” over crypto trades that meet commodities law, but not anything that may be a security.

The crypto industry has been pushing for either a federal agency or Congress to create a clear definition of “digital commodity” or digital security, which could give companies greater clarity on when and how they must register with the CFTC or the SEC (the U.S. Securities and Exchange Commission).

The bill seeks to bestow crypto oversight to the CFTC, which the crypto industry sees as friendlier than the SEC. By giving primary responsibility for crypto oversight to the CFTC, the bill sidelines the SEC, whose chairman, Gary Gensler, has taken aggressive actions toward cryptocurrency interests.

Gensler considers most digital assets in the roughly $1.2 trillion market to qualify as securities, similar to stock in publicly traded companies, giving his agency the responsibility to oversight them and their issuers. But the bipartisan bill rejects such a claim and considers most digital assets much more similar to commodities than securities.

Image source: Shutterstock


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Biden’s pick for CFTC chair wants the agency to be a ‘beat cop’ with the authority to oversee 60% of digital asset market

Acting chairperson of the Commodity Futures Trading Commission, or CFTC, Rostin Behnam has likened the government agency’s enforcement of the digital asset space to a beat cop on duty.

At an Oct. 27 hearing of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry to assume his position on a permanent basis, Behnam said to chairperson Debbie Stabenow the CFTC has been “aggressively pursuing enforcement cases” in the crypto space for some time, including its $100 million case against crypto derivatives exchange BitMEX and the $42.5 million in fines it levied against Tether and Bitfinex. However, he asked that the committee consider expanding the authority of the CFTC given the emerging digital asset market.

“This is the tip of the iceberg,” said Behnam. “As of yesterday, the total size of the digital asset market was $2.7 trillion. Among that $2.7 trillion, nearly 60% were commodities […] given the size, the scope, and the scale of this emerging market, how it’s interfacing and affecting retail customers, and 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 on the beat.”

Behnam also responded to a question from Ohio Senator Sherrod Brown on whether the CFTC would require “additional tools” to handle enforcement in the crypto space, saying the agency as well as the Securities and Exchange Commission would likely need “a regulatory structure for both securities and commodities.” Both groups in addition to the Financial Crimes Enforcement Network currently handle digital asset regulation in the United States, but with different jurisdictional claims, resulting in a patchwork approach companies must navigate to legally operate.

“The markets and the market transactions that are taking place right now are a huge part of the risk that digital assets pose,” added Behnam.

Related: CFTC commissioner says agency has broad enforcement authority on crypto derivatives

There are currently only two commissioners serving at the CFTC out of the normal five since the departure of Dan Berkovitz earlier this month, Brian Quintenz in August, and former chair Heath Tarbert in January. Behnam — who has been serving as acting chair at the agency following Tarbert’s departure — is President Joe Biden’s pick to lead the CFTC. In addition, Biden has chosen Kristin Johnson and Christy Goldsmith Romero to fill two of the remaining three seats. All must be confirmed by the Democrat-controlled Senate.