Regulation
CFTC Steps Up Crypto Enforcement While SEC Under Scrutiny
Recent developments have highlighted a significant escalation of enforcement actions in the US crypto regulatory environment. Rostin Behnam, president of US Commodity Futures contracts The Trading Commission (CFTC) expects increased scrutiny as investor interest in the crypto sector remains robust.
Meanwhile, the Securities and Exchange Commission (SEC) faces criticism for its handling of high-profile cases and its approach to cybersecurity oversight.
A Closer Look at the CFTC’s Enforcement Strategy
At the Milken Institute Global Conference 2024, Rostin Behnam highlighted the regulatory challenges of the crypto market. Despite the tumultuous events of 2022, including market downturns and corporate bankruptcies, the sector continues to grow and attract investment.
Behnam anticipates another round of application in the next 6 to 24 months. This cycle is fueled by asset appreciation and the increase interest of individual investors.
Learn more: How does regulation impact crypto marketing? A complete guide
“Without a regulatory framework, without transparency and without appropriate tools, we are bound to witness continued fraud and manipulation,” Behnam warned.
Rostin Behnam at the Milken Institute Global Conference 2024. Source : X/EleanorTerrett
As regulatory actions intensify, so does the dialogue on Capitol Hill, with active discussions on crypto and stablecoin legislation. Behnam highlighted the limited number of working days in Congress before the election, challenging the passage of major crypto-related bills.
Nonetheless, lawmakers are eager to close regulatory gaps, particularly regarding stablecoins. This legislative context is crucial because it shapes the regulatory contours of the future of cryptocurrency in the United States.
“It’s hard to pass legislation these days,” Behnam admitted.
Still, Behnam remains hopeful of achieving the regulatory clarity needed to foster innovation while ensuring market stability.
SEC criticized for excessive regulation
Moving on from the CFTC’s regulatory foresight, the SEC has been criticized for its perception of regulatory overreach. US Representative John Rose sharply criticized the SEC Actions Against Robinhood Trading Platform.
“The SEC exceeded its mandate to protect investors and maintain fair and orderly markets by issuing a Wells Notice to Robinhood, a precursor to enforcement action. I am proud to help lead the effort to bring clarity by passing the FIT for the 21st Century Act so that rogue regulators like Gary Gensler can focus on their mandate of protecting investors and not disrupting the innovation,” Rose said. declared.
Recent revelations about the SEC’s cybersecurity failings have further tarnished its reputation. FOX Business reporter Eleanor Terret reported that an independent review in 2023 found the SEC’s cybersecurity infrastructure to be inadequate.
Criticism report, dated December 20, 2023, was obscurely placed on the SEC website. Additionally, Terret added that SEC Chairman Gary Gensler did not mention this report in his responses to Congress about the hack.
“Imagine what the SEC would do if a public company learned of a vulnerability, didn’t fix it, and then got hacked. Will the SEC face repercussions? She interrogates.
BeInCrypto reported that on January 9, the commission’s report Account X (formerly Twitter) has been compromised, falsely announcing the approval of a Bitcoin ETF. This caused the price of Bitcoin to rise to $48,000, only to drop to nearly $45,000 after the hack was revealed. The incident led to large Bitcoin liquidations, amounting to around $90 million in losses.
Learn more: What does it mean to receive a Wells Notice from the SEC?
The urgency for a cohesive regulatory framework is growing as the CFTC signals a tougher stance on crypto enforcement and the SEC grapples with internal criticism and challenges. The current regulatory environment, marked by the SEC’s recent Wells notices to entities like UniswapConsensys and Robinhood, alongside CFTC Enforcement Actions Against DeFi Platformshighlights a fragmented approach that could stifle innovation and discourage investment.
In conclusion, regulatory clarity is essential. To favor a balanced regulatory environment that protects investors while fostering innovation is essential as the industry evolves.
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