CFTC Chair Rostin Behnam tells Senate agency can handle greater crypto responsibilities News ▸ US ▸ Regulation
CFTC Chair Rostin Behnam tells Senate agency can handle greater crypto responsibilities
Behnam denied the suggestion that the CFTC would be "biting off... more than it can chew" if it gained additional crypto authority.
2 min read
Updated: Jun. 13, 2024 at 10:22 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
CFTC chair Rostin Behnam said the agency is capable of handling additional crypto responsibilities during a hearing before the Senate Committee on Appropriations on June 13.
Behnam denied the suggestion that the CFTC would be “biting off… more than it can chew” if it gained additional crypto authority.
He asserted that crypto commodities fall under the agency’s responsibilities and described a gap in regulation that can be filled.
Behnam said that the CFTC is “adequately equipped” to oversee markets that it traditionally does but would require additional funding if it gains authority over crypto markets.
Behnam also accepted the suggestion that existing KYC/AML laws can be applied. He said:
“I don’t think we need to stray too far from existing law.”
CFTC has limited authority
The CFTC’s authority over crypto and non-traditional assets is currently limited to fraud and manipulation. In a prepared statement, Behnam said that the CFTC can only pursue issues it learns of through surveillance and oversight or tips and complaints.
Behnam highlighted that the CFTC brought 47 crypto cases during the 2023 fiscal year, representing nearly half of the agency’s cases. He said:
“With many agency resources which are not considered in our budget appropriation being allocated to an unregulated market, I fear the current trajectory is unsustainable.”
He warned of “rampant fraud and manipulation” if the trend continues.
During the hearing, Behnam added that the company has executed 135 crypto cases over the past decade and earned billions of dollars despite its lack of direct authority or jurisdiction.
Gensler urges conditional CFTC powers
SEC chair Gary Gensler, who also testified at the hearing, said that the CFTC’s ability to handle additional crypto responsibilities is “conditional” on the exact assigned duties.
Gensler claimed up to 20,000 crypto tokens exist, adding that the CFTC lacks the SEC’s existing disclosure model for the securities market, which includes most crypto.
Gensler said:
“Its this disclosure-based regime that we have at the SEC … the crypto field has been thumbing its nose at it and been non-compliant.”
Gensler responded to the question of whether the agencies have equal authority. He said the SEC has about nine times the staff and a “greater remit” than the CFTC.
Budget
The Senate hearing largely concerned the presidential budget request, which would grant the SEC a $2.6 billion budget and provide the CFTC with a $399 million budget for the 2025 fiscal year.
The increased budget will allow both agencies to expand or maintain the scope of their existing duties, including through staffing and other costs.
Separate from the budget, Congress could grant the agencies new authority through the Financial Innovation and Technology for the 21st Century Act (FIT21). The bill delineates SEC and CFTC roles. FIT21 passed the House but is not guaranteed to pass the Senate and become law.
The Lummis-Gillibrand Responsible Financial Innovation Act also aims to expand the CFTC’s scope, but it has not advanced since its 2023 reintroduction.
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Mike Dalton
Before transitioning to crypto writing in 2018, Mike studied library and information sciences. Currently, he resides on Canada's West Coast.
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Gary Gensler is an American government official and former investment banker who President Joseph Biden nominated to chair the U.S.