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The Chairman of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, has called for increased funding and regulatory authority to oversee cryptocurrency spot markets. This comes as lawmakers move closer to comprehensive legislation in the crypto space.
Speaking at the Senate Agriculture Committee hearing on Digital Commodities oversight, Behnam emphasized that the CFTC is well-positioned to serve as the primary watchdog for cryptocurrencies. Citing an Illinois court verdict that classified Bitcoin (BTC) and Ethereum (ETH) as digital commodities, Behnam asserted that the CFTC has the “expertise and capacity” to lead a regulatory regime. However, he noted that the commission requires additional tools and resources to accomplish this effectively.
“We’ve heard again and again that the CFTC and SEC lack resources and tools they need to conduct oversight in this huge market,” Senator Cory Booker remarked, urging for clear U.S. crypto policies and additional powers for the CFTC.
Increasing Efforts for a Regulatory Framework
Policymakers are intensifying efforts to create a cryptocurrency regulatory framework amid a jurisdictional dispute between the CFTC and the Securities and Exchange Commission (SEC) over who should oversee the industry. A significant point of contention is operational capacity, with the CFTC employing about 700 staff compared to the SEC’s 4,500 workers. Despite this disparity, over 50% of the CFTC’s litigation has involved crypto fraud or digital assets.
“It is a staggering statistic for an agency that oversees a trillion-dollar market to allocate half its resources to a market for which it does not regulate or gets appropriated funds. It puts both markets at risk and exposes that there’s so much fraud in the crypto space,” Behnam said.
The CFTC chairman expressed confidence in the agency’s ability to regulate crypto markets but stressed the need for a new regime with clear rules defining commodities and securities. Behnam believes that 70-80% of cryptocurrencies are non-securities. In contrast, SEC Chair Gary Gensler has frequently shared a different opinion, stating that existing federal laws cover most cryptocurrencies. Gensler classifies the majority of the industry under securities rules, although the regulator has not explicitly stated so.
Bill to Assign the CFTC Crypto Oversight
Senator Debbie Stabenow, the committee chair, informed fellow policymakers of a bill to provide the CFTC with official regulatory oversight of crypto. According to Senator Stabenow, the bill focuses mainly on centralized platforms like crypto exchanges rather than decentralized finance (DeFi). It would implement capital reserve and cybersecurity compliance from digital asset service providers.
Stabenow’s policies would also afford the CFTC recurring funding and constitutional authority to police digital commodity markets, including crypto spot markets. Although Senator Stabenow is expected to resign in January 2025, she is pushing the bill’s terms in Congress and mentioned that committee members should receive language packages by Friday.
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