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Rostin Behnam, chairman of the Commodities and Futures Trading Commission (CFTC), is pushing for his agency to take a leading role in regulating digital assets. He maintains that his agency is well positioned to provide market protection for consumers and reduce risks in the space.
Behnam made his case for expanding the CFTC’s authority in a letter to the House and Senate Agriculture Committees on Tuesday. He asserted that his agency already follows core principles that help sufficiently oversee a wide range of markets, and that the crypto market isn't an exception.
The dispute on how crypto should be classified is a major source of tension between U.S. regulators and top industry players. While both the CFTC and Securities and Exchange Commission remain confident that current laws may be adequate, exchanges such as Coinbase are arguing a new federal regulator be created just for cryptocurrencies.
But that appears unlikely. A report in October suggested that the Biden Administration was planning an executive order to organize research and regulation of crypto among pre-existing agencies.
Behnam emphasized the need for better regulations soon, given the number of retail participants involved in crypto trading.
“In my opinion,” he said, “there are important principles missing from the current regulatory framework applicable to digital asset markets that we see in other federally regulated markets, particularly ones that primarily cater to retail investors.”
Earlier on Wednesday, Behnam testified before the Senate to elaborate on his position. Industry executives including FTX CEO Sam Bankman-Fried also attended.
“The digital asset market, which at present is most directly supervised through state money transmitter licenses, is unique, and presents many novel issues for the CFTC, given our limited authority to police these volatile markets," Behnam added.
Bankman-Fried, in agreeing with Behnam, said he’d prefer the CFTC help provide more regulatory clarity, adding, “I would love to see the CFTC play a more active role.”
But a big problem is that SEC Chairman Gary Gensler feels the same way about his own agency, vying for more control of various aspects of crypto markets and deeming "most" cryptocurrencies—possibly including stablecoins—securities.
"There are thousands of these projects, basically trying to raise money from the public so that they can back an entrepreneurial idea," Gensler told CNBC last month. "That part's all right—that, in fact, is called innovation—but it's about bringing it into the securities laws."