The US Commodity Futures Trading Commission (CFTC) Chairman, Rostin Behnam, requested that his agency have the responsibility of regulating the cryptocurrency spot market in testimony before the Senate Agriculture Committee (SAC).
The Senate’s Wednesday hearing focused on “Examining Digital Assets: Risks, Regulation, and Innovation,” where Behnam’s main argument was the lack of authority to oversee crypto spot trading activity.
His recent appeal shows an urgent need for more authority to monitor the crypto industry, urging Congress to consider giving more resources to the CFTC and there should be “as few regulators as possible.” The SAC hearing came the day after the U.S. Justice Department seized over $3.6 billion worth of digital currency stolen that resulted from the Bitfinex exchange being hacked back in 2016, its largest financial seizure to date.
Upon its inception in 1974, the CFTC was tasked with regulating and monitoring traditional derivatives market, to help minimize market fraud and manipulation. In his request before the SAC, Behnam suggested that Congress pass some type of law that would extend the CFTC’s authority to be able to regulate cash markets for certain types of cryptocurrencies, as the agency is currently limited to regulating only derivatives.
“We are past the stage where digital assets and decentralized financial technologies are a research project, sandboxing what may come in the future. The issues are at the front and center of our thinking at the Commission in addition to our traditional regulatory, oversight and enforcement responsibilities,” Behnam said in his introductory remarks at Wednesday’s hearing.
“In essence, this is an unregulated market,” he continued. “There is so much that we are not able to see because of this limited authority.”
Crypto frauds and cyber threats
When Senator John Boozman asked about the cybersecurity measures concerning people’s assets, the CFTC Chairman said that the agency takes suggestions from the US Department of Homeland Security (DHS).
“We [CFTC and DHS] work together, we have a lot of partnerships to make sure we’re using the same tools and resources to the extent that we can root out cyber threats,” he said. “I don’t think this would be generally different if you’re to give us more authority over the digital assets space in terms of our coordinating effort.”
Behnam mentioned his concerns with CFTC’s current authority over the rapidly growing market. He added that with more authority, the CFTC will be allowed to “look through just the direct registrant and not necessarily only skim what cyber protections or what principles that registrant might be using.”
More budget, please!
CFTC’s current annual budget is roughly $300 million and unlike other financial regulators like the Federal Reserve Board or the Securities and Exchange Commission, Behnam’s agency does not have self-funding. The Chairman requested an additional $100 million besides more authority for better control over the digital asset markets.
“We can’t afford to wait until the next crisis. Congress must work with regulators and the Biden administration to design a framework that protects consumers and our environment and keeps our markets fair, transparent and competitive,” said the chairwoman of the SAC, Senator Debbie Stabenow. “The CFTC will play a key role in that effort.”
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