Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam has started a regulatory debate on cryptocurrencies. During a recent Senate hearing, Behnam challenged the Securities and Exchange Commission (SEC) by stating that 70-80% of crypto assets do not fall under securities regulations.
Fox reporter Eleanor Terrett reported on July 9 that Behnam referenced an Illinois court ruling, affirming Bitcoin (BTC) and Ethereum (ETH) as digital commodities regulated by the Commodity Exchange Act. This contrasts sharply with SEC Chairman Gary Gensler’s assertion that the majority of cryptocurrencies are deemed securities.
During the hearing, where many senators questioned Behnam about cryptocurrency regulations, the pressing need for clear legislative. Senator Cory Booker stressed the importance of prompt action. He cautioned that any delays could result in an increase in individuals falling target to cryptocurrency scams.
CFTC regulatory challenges in crypto market
Behnam also shed light on the CFTC’s challenges in regulating the crypto market. He described the technology behind digital assets as “very unique and different” compared to traditional asset classes. This necessitates new approaches to cybersecurity and operational resilience.
The chairman of the CFTC shared a surprising fact: close to half of the agency’s enforcement workload involves cases related to cryptocurrencies. Behnam described this as “remarkable,” considering the CFTC’s oversight of trillion-dollar markets. But it lacks sufficient jurisdiction and funding for crypto regulation.
The discussion also addressed the ongoing competition between the SEC and CFTC, often referred to as a “turf war.” Behnam, when prompted about the potential consolidation of crypto regulation under CFTC oversight, voiced openness, highlighting the agency’s competence and capability. Nonetheless, he cautioned that such a shift might necessitate a reevaluation of what qualifies as a security or a commodity.
Behnam interestingly revealed that the SEC and CFTC coordinate on enforcement but do not collaborate on regulatory matters. Additionally, he expressed a preference for regulating centralized exchanges over DeFi platforms, recognizing the need for a unique approach due to the distinctive nature of DeFi.
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