The Commodity Future Trading Commission is “well positioned” to address regulatory gaps in the crypto market, according to CFTC Chair Rostin Behnam.
In prepared remarks for a February 3 American Bar Association event, Behnam said his stance toward cryptocurrencies has not changed. He said he believes there remains a regulatory gap but the “CFTC is well positioned to fill this” gap if Congress gives the agency the necessary authority.
The CFTC Chair mentioned that the crypto market “was shaken to its core” last year following a string of failures, bankruptcies, and collapses that saw around $2 trillion worth of value wiped out of the market. He said this is a clear indication that the market needs comprehensive legislation.
“Regulation is necessary to protect customers and to prevent failures which cannot predictably be contained within any boundaries across the domestic and global financial markets. Regardless of whether one or many occur in 2023 or 2033, we must act.”
Behnam noted that CFTC has brought 69 enforcement actions against digital assets that are believed to be commodities in interstate commerce, swaps, and other derivatives. These cases accounted for more than 20% of the 82 actions filed last year, he said.
More specifically, the CFTC Chair mentioned that the agency has brought the first enforcement action against a decentralized finance trading, a DAO, for offering leveraged and margined retail commodity transactions to the public.
As reported, the CFTC sued Ooki DAO on charges of running an unregistered crypto futures trading facility and failing to conduct proper know-your-customer checks in September 2022.
Meanwhile, Behnam further said that budget increases for the commission would also help grow its enforcement team. He said the team was “working towards another strong year of precedent-setting cases” against fraudulent or illegal digital asset projects.
Late last year, the CFTC Chair said Bitcoin should be considered a commodity for regulatory purposes. However, he said “[Bitcoin is] unlike any commodity we have dealt with,” admitting that the asset is difficult to regulate within the current framework.
On the other hand, Behnam said ETH might not be considered a commodity. If ETH is instead deemed a security for regulatory purposes, a stronger regulatory crackdown on both ETH as well as nearly all other altcoins can be expected from US regulators.
It is worth noting that the CFTC also brought civil charges in December against FTX, Bankman-Fried, and Alameda Research for misappropriating customer funds. Aside from the agency, the Securities and Exchange Commission (SEC) and the Justice Department are separately pursuing a criminal case against Bankman-Fried.