- Commodity Futures Trading Commission Chairman Rostin Behnam pointed out the dangers in an unregulated crypto market.
- The CFTC chairman has called on lawmakers to give the commission greater regulatory authority, in order to prevent fraud and misconduct in the crypto market.
- The chairman of the commission has been heavily singled out and criticized for his relationship with FTX and its founder Sam Bankman-Fried.
Commodity Futures Trading Commission Chairman Rostin Behnam noted the dangers in an unregulated crypto market, in addition to highlighting the urgent need to enact laws that allow regulating the cryptocurrency space.
Behnam, who has been heading the Commodity Futures Trading Commission since last year, has pointed out that, if there are no regulations enough, there is a high probability that events such as the FTX collapse.
Regulation to prevent a collapse like FTX’s
On November 1, in a speech before the US Senate Committee on Agriculture, Nutrition and Health, Behnam had pointed out the need to enact strict standards across the digital marketplace space.
Due to this, the president of the commission emphatically asked the legislators to provide the CFTC a greater regulatory authority, in order to prevent fraud and misconduct in the crypto market, pointing out that the collapse of FTX should not be taken lightly, in addition that it demands responsibility, towards its clients.
“As I have stated publicly many times before, I strongly believe that we must move quickly on a thoughtful regulatory approach to put in place safeguards in these fast-growing markets of evolving risk, or they will continue to be an unsafe business for customers and could present an increasing risk. for the financial system in general”he declared.
In the same way, Behnam made his perspective clear about the urgent need for regulations are developed with the aim of preventing digital asset exchange houses from having affiliated hedge funds that trade on the platform, clearly making reference to the proximity of Alameda Research to FTX.
Likewise, he pointed out that in order to carry out the above, the foundation of an organization that has the capacity to regulate digital assets is also necessary.
CFTC Recommendations
The CFTC made some recommendations on this issue, noting that it is necessary for exchanges that have an interest in serving retail investors must be registered with a federal market regulator.
This is because part of the regulation will force players to define the division and protection of client funds, the appropriate capital support to operate and public disclosures backed by independent accounting.
Behnam in the midst of criticism
Although what Behnam pointed out may be true in favor of benefiting those most affected, that is, the clients, his speech may lose some force due to the criticism he has faced. the chair of the commission, as many people have pointed out and criticized his relationship with FTX and its founder Sam Bankman-Fried.
In this regard, it is believed that his company spent a long time locked in a series of conversations with the commission, about a controversial proposal to grant users to carry out transactions with borrowed money directly through FTX, instead of a broker. .
It should also be noted that the CFTC was poised for increased funding and oversight through proposed Senate legislation (Digital Commodity Consumer Protection Act or DCCPA), which, coincidentally, was backed by Bankman-Fried, which Behnam called a “big step forward,” last September.
Another dilemma he has faced Behnam is his perspective on crypto assets and their consideration as commodities. This is because he has indicated that his commission has a restricted capacity to comply with the law, due to the fact that it does not have direct supervision.
This gap is relevant in their statements, since has sparked debate as to whether different virtual currencies should be classified as commodities or as securities, the latter being a direct competence of the US Securities and Exchange Commission.
In this regard, Behnam pointed out at the time that the only digital asset that should be considered a commodity is the so-called “digital gold”, Bitcoin, in addition to having retracted his own previous comments, in which he hinted that Ether could also be considered a basic product.
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