Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC), has participated in several events this week, reclaiming the position of his agency in the crypto space and suggesting that more enforcement actions are likely.
On Thursday, Behnam participated in the 2022 FINRA annual conference to discuss crypto regulation and attended, virtually, a crypto conference hosted by Chainalysis Links.
In one of his remarks, the CFTC’s chair focused on the increasing number of cases of digital asset fraud and manipulation, a trend that he said should be dealt with. “Headlines about the loss of tens of millions of dollars in digital assets due to protocol exploits, phishing attacks, preying on vulnerable people and other fraudulent and manipulative schemes have become far too common,” said Behnam.
According to Behnam, the regulator has filed more than 50 enforcement actions related to digital assets since 2015, and more than half of those involved allegations of fraud. Twenty-three of these cases were filed just during the last year, and around 65% of the total number of crypto-related fraud enforcement cases were brought in the last two and a half years, Behnam said.
Following the steps of the Securities and Exchange Commission (SEC), which is seeking to increase its resources in the Crypto Unit, Behnam said that the CFTC will also look to prioritize the use of its existing authority to deter and combat fraud and manipulation in the crypto markets and will continue to add resources in this area.
Read More: SEC’s Gensler Urges Congress to Fund Crypto, AI Reg, Enforcement Plans
On Monday, in an interview for CNBC, Behnam discussed the role that the agency may have in the oversight of crypto assets and the relationship with the SEC. During the interview, Mr. Behnam confirmed his views that bitcoin and ethereum are commodities and should fall under the CFTC remit. For the rest of tokens and crypto assets, both agencies should proceed with caution because some of them may be considered securities, but many others are commodities — and given the constant evolution of the technology and the new products coming to the market, it is not easy to establish a clear definition at front, Behnam argued.
The CFTC chair said that it would make sense to analyze all types of assets in order to determine which of these assets qualify as commodities or securities.
When he was asked about the relationship between the SEC and the CFTC, he replied that this is “an age-old matter” and that both agencies over the years had a great relationship, and they continue to work together and communicate. Rather than competing with each other for crypto oversight, the agencies are trying to offer customer and investor protection, said Behnam.
On the regulatory side, Behnam mentioned that following President Biden’s Executive Order on cryptocurrencies issued in March, the agency is “putting together reports that could include legislative proposals” and they are exchanging ideas about “how to regulate the markets, whether it is stablecoins, markets payments and other issues, which are complicated and very novel, and are causing chaos at times.”
Senator Cynthia Lummis announced on Tuesday that a group of bipartisan Senators are planning to release a bill that will include a clear definition of crypto assets that will adequately allocate responsibilities between the SEC and the CFTC. Senator Lummis has previously shown her views that most crypto assets should be considered commodities and therefore supervised by the CFTC, but at a recent event she suggested that the proposed bill may have a more balanced approach.
Read More: Bipartisan Bill Paves the Way for CFTC’s Crypto Oversight
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More