Commodities and Futures Trading Commission (CFTC) Chair Rostin Behnam promised to bring down the enforcement hammer on non-compliant crypto projects in 2023.
Speaking at the American Bar Association, Behnam lauded his agency’s 69 digital enforcement actions to date as proof of its determination to bring down bad actors this year.
CFTC Chair Advocates Enforcement and Regulation
According to Behnam, the agency imposed over $2 billion in restitution, disgorgements, and civil monetary penalties during the 2022 financial year. One-fifth of all enforcement actions were crypto-related, which the chair considers considerable given the C FTC’s limited authority.
Concerning crypto, the CFTC currently has jurisdiction over derivatives markets in the U.S., including Bitcoin futures.
Its sister agency, the Securities and Exchange Commission, has repeatedly rejected applications for a spot Bitcoin Exchange-Traded Fund, maintaining that the underlying market is open to manipulation.
The chair emphasized the need for “comprehensive” regulation. Regulation is needed, Behnam argues, to insulate customers and prevent failures whose impact could transcend national borders.
“Regardless of whether one or many occur in 2023 or 2033, we must act. There is a new Congress, and I will continue to engage and provide technical assistance to draft legislation, as requested,” he said.
U.S. Senators Debbie Stabenow, John Boozman, and John Thune introduced The Digital Commodity Exchange Act of 2022 in Aug. 2022 to bring crypto under the jurisdiction of the CFTC.
CFTC Approach Starkly Contrasts With Sister Agency
Behnam’s two-pronged approach contrasts with the SEC, which has, by and large, chosen to enforce rather than regulate.
After the collapse of FTX industry players including MicroStrategy’s Michael Saylor and Coinbase’s Brian Armstrong, called for greater regulatory clarity.
However, SEC chair Gary Gensler has stuck to his guns, decrying the need for new regulations while insisting that existing securities laws suffice. The agency laid down the law through 30 crypto enforcement actions in 2022 alone. As of December 2022, the agency imposed civil penalties worth $2.06 billion on organizations that ran initial coin offerings.
Senators Convene to Discuss Crypto Crash After Start of Congress
Behnam was the sole witness at a hearing of the Senate Agricultural and Banking Committee on Dec. 1, 2022, to discuss remedial actions after the collapse of FTX. In the hearing, Behnam called for Congress to widen the ambit of the C FTC’s authority. The 2023 Congressional session convened on Jan. 3, 2023, with several crypto bills clamoring for lawmakers’ attention.
On Feb. 14, 2023, the Senate Banking Committee will convene a hearing to discuss the recent crypto crash that culminated in the collapse of FTX.
The hearing, entitled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets,” will be the second in two months after the collapse of the Bahamian exchange FTX in November 2022. Hollywood actor and Bitcoin skeptic Ben McKenzie and Shark Tank’s Kevin O’Leary testified at the last hearing on Dec. 14, 2022.
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