The Commodity Futures Trading Commission should be given greater authority to regulate cryptocurrency markets and has created a new office to better carryout its existing crypto authorities, Chairman Rostin Behnam said Monday.
“We need clear market oversight over digital commodity assets, and right now, I mentioned 50-some-odd enforcement cases, every single one of those cases has been driven by a tip or a whistleblower externally, so we don’t have traditional market surveillance or market oversight authority,” Mr. Benham said at an event hosted by the Brookings Institution called “The Future of Crypto Regulation.”
He noted that since 2014, the CFTC has brought more than 50 enforcement actions for digital assets.
“Everything that we do now in traditional derivatives markets, we can be doing in the crypto space,” Mr, Behnam said during a question-and-answer session. “I think it would benefit both customers for sure, in particular protecting customers and bringing transparency to the market but ultimately … as we see this market continue to grow, having that creditability and having that transparency will help it grow.”
Mr. Behnam noted that there is still a debate as to how regulators should classify digital assets. The Securities and Exchange Commission — the other regulator on the front lines of the U.S. crypto market — does not consider the two biggest cryptocurrencies — bitcoin and ethereum — to be securities, but there is less certainty regarding smaller cryptocurrencies.
Crypto proponents favor the commodity designation because there are less stringent regulatory requirements associated with it.
To that end, a bipartisan pair of senators — Cynthia Lummis, a Republican from Wyoming, and Kirsten Gillibrand, a Democrat from New York — introduced a bill in June that would give the CFTC additional powers in regulating the cryptocurrency market and classify more cryptocurrencies as commodities rather than securities.
But in the absence of new legislative authority, the CFTC is continuing “to look at how we can work to protect markets and investors within the bounds of our existing authority,” Mr. Behnam said.
The agency is transitioning its financial technology team — LabCFTC — to a new office of technology innovation, Mr. Behnam announced Monday.
“OTI will also have an opportunity to evolve within its new structure and have flexibility to meet needs both internally at the commission and externally in the regulatory space and in the markets,” Mr. Behnam said.
He added, “We have moved past the stage of digital assets as a research project.”
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