CFTC chairman Rostin Behnam has called for increased funding and regulatory authority to oversee cryptocurrency spot markets as lawmakers move closer to comprehensive legislation.
Speaking before the Senate Agriculture Committee hearing on Digital Commodities oversight, Behnam stated that his agency is well-positioned to serve as the primary crypto watchdog.
Citing an Illinois court verdict that classified Bitcoin (BTC) and Ethereum (ETH) as digital commodities, Behnam said the CFTC has the “expertise and capacity” to lead a regulatory regime. Behman told attendees that the commission requires additional tools and resources to achieve this.
“We’ve heard again and again that the CFTC and SEC lack resources and tools they need to conduct oversight in this huge market,” Senator Cory Booker remarked as he urged clarifying U.S. crypto policies and equipping the CFTC with additional powers.
Increasing efforts for a regulatory framework
Policymakers are intensifying efforts to create a cryptocurrency regulatory framework amid a turf war between the CFTC and the Securities and Exchange Commission (SEC) over which agency should police the nascent industry.
A significant point of contention is operational capacity, with the CFTC employing about 700 staff compared to the SEC’s 4,500 workers. Despite this disparity, over 50% of the CFTC ligations have involved crypto fraud or digital assets.
“It is a staggering statistic for an agency that oversees a trillion-dollar market to allocate half its resources to a market for which it does not regulate or gets appropriated funds. It puts both markets at risk and exposes that there’s so much fraud in the crypto space”, Behnam said.
The CFTC chairman expressed confidence in the agency’s ability to regulate crypto markets but stressed the need for a new regime with clear rules defining commodities and securities.
That said, Behman believes 70-80% of cryptocurrencies are non-securities. Gary Gensler, the SEC chair, has frequently shared a contrary opinion and said that existing federal laws cover most cryptocurrencies. Gensler essentially classifies the lion’s share of the industry under securities rules, although the regulator has refrained from categorically saying so.
Bill to assign the CFTC crypto oversight
The committee chair, Senator Debbie Stabenow, informed fellow policymakers of a bill to provide the CFTC with official crypto regulatory oversight.
According to Senator Stabenow, the bill focuses mainly on centralized platforms like crypto exchanges rather than DeFi. It would implement capital reserve and cybersecurity compliance from digital asset service providers.
Stabenow’s policies would also afford the CFTC recurring funding and constitutional authority to police digital commodity markets, including crypto spot markets. Although Senator Stabenow is expected to resign in January 2025, the lawmaker is pushing the bill’s terms in Congress and said committee members should receive language packages by Friday.
