Regulation
CFTC Chairman Urges Congress to Pass Crypto Regulation Legislation
President CFTC Rostin Behnam told Congress that there is an urgent need for legislation that could clarify regulation of the crypto industry to ensure investors are properly protected.
Behnam made the statement during his testimony before the House Agriculture Committee on March 6, which focused primarily on the C FTC’s FY 2025 budget request.
Behnam said:
“The idea that crypto is disappearing is a false narrative.”
He added that more than 49% of CFTC actions filed in the 12 months ending October 2023 involved behaviors related to digital assets despite the fact that “no federal agency maintains direct regulatory authority” over the crypto industry.
Framework in 12 months
During the hearing, Behnam spoke about the challenges and opportunities presented by digital assets, such as Bitcoin (BTC) and Ethereum (ETH), which represent a significant portion of the total crypto market capitalization.
He said there is a false perception among regulators and lawmakers that the digital asset market may be losing relevance. However, the previous decade has shown that this is far from the case, as demand for these assets has grown exponentially over this period.
Behnam stressed the need for proactive legislative measures to ensure a stable and transparent regulatory environment. He added that investor protection should be the government’s main priority, given the growing interest in digital assets since the start of the year.
Behnam said it would take the CFTC approximately 12 months to develop a comprehensive regulatory framework for digital assets if Congress passes the Financial Innovation and Technology for the 21st Century Act (FIT Act).
The FIT Act, which passed the House Agriculture and Financial Services committees without reaching a floor vote, aims to clarify regulatory responsibilities regarding digital assets.
BTC, ETH are commodities
Behnam’s testimony also addressed committee members’ inquiries regarding the classification of digital currencies as commodities or securities, a distinction that impacts regulatory jurisdiction.
In response to a question from Rep. John Duarte, Behnam explained that digital assets are generally considered commodities if they do not meet the criteria to be classified as securities, indicating the nuanced approach required to effectively regulate these assets.
Behnam added that Bitcoin and Ethereum do not meet the necessary criteria to be classified as securities, which automatically means they fall under the category of commodities despite being incredibly different from physical commodities like gold or but.
The CFTC chairman told Duarte that there is a huge appetite for Bitcoin among retail and institutional investors, whether or not the government wants to legitimize it.
Behnam admitted that regulators have tried to integrate crypto into other frameworks and that the industry must be considered separately.