Regulation
70-80% of cryptocurrencies are not securities
CFTC Chairman Rostin Behnam 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 on oversight of digital commodities, Behnam said his agency is well positioned to serve as the lead cryptocurrency watchdog.
Citing an Illinois court verdict that classified Bitcoin (Bitcoin) and Ethereum (ETH) as digital products, Behnam said the CFTC has the “expertise and capacity” to lead a regulatory regime. Behnam told attendees the commission needs additional tools and resources to do so.
“We have heard time and time again that the CFTC and SEC lack the resources and tools they need to oversee this massive market,” said Senator Cory Booker. REMARK as he urged clarification of U.S. crypto policies and giving the CFTC additional powers.
Increased efforts for a regulatory framework
Policy makers are to intensify efforts to create a regulatory framework for cryptocurrencies amid a turf war between the CFTC and the Securities and Exchange Commission (SEC) over which agency should oversee the nascent industry.
A major point of contention is operational capacity, with the CFTC employing about 700 people compared to the SEC’s 4,500. Despite this disparity, more than 50% of the CFTC’s litigation has involved crypto or digital asset fraud.
“It’s a staggering statistic that an agency that oversees a trillion-dollar market is allocating half of its resources to a market that it doesn’t regulate and doesn’t receive appropriate funding for. It puts both markets at risk and reveals that there is so much fraud in the crypto space,” Behnam said.
The CFTC chairman expressed confidence in the agency’s ability to regulate cryptocurrency markets, but stressed the need for a new regime with clear rules defining commodities and securities.
That said, Behman estimates that 70 to 80% of cryptocurrencies are not securities. Gary GenslerThe SEC chairman has often expressed a contrary view, saying that existing federal laws cover most cryptocurrencies. Gensler essentially classifies the lion’s share of the industry under securities rules, though the regulator has stopped short of saying so outright.
Bill to give CFTC oversight of cryptocurrencies
Committee Chair Sen. Debbie Stabenow briefed her fellow policymakers on a bill that would provide the CFTC with formal regulatory oversight of cryptocurrencies.
According to Senator Stabenow, the bill focuses primarily on centralized platforms like cryptocurrency exchanges rather than DeFi. It would implement capital reserve and cybersecurity compliance for digital asset service providers.
Stabenow’s policies would also give the CFTC recurring funding and constitutional authority to police digital commodity markets, including cryptocurrency spot markets. Although Sen. Stabenow is set to resign in January 2025, the lawmaker is pushing the bill’s language in Congress and said committee members should receive the language by Friday.