Clearer Rules: CFTC Chair Voices Concerns Over SEC’s Crypto Regulation

The increased oversight by the US Securities and Exchange Commission (SEC) towards the crypto industry has prompted both the community and regulators to question the approach taken by the US watchdog.

In a recent testimony before the US House Committee on Agriculture, the Chairman of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, highlighted the need for Congressional action to address the lack of federal regulation over the digital commodity market.

“Regulation by Enforcement” Is Unsustainable

Behnam emphasized that bringing this volatile market out of the shadows and into the regulatory fold would protect customers, ensure market resilience and stability, and prevent contagion to the traditional financial system.

Behnam further claimed that the events over the past year have added urgency to these recommendations, as the bankruptcy of several large digital asset platforms erased billions of dollars in customer funds and multiple large market participants allegedly engaged in manipulative and abusive trading activity.

Furthermore, Behnam believes that these tools are necessary to prevent future crises and should be applied to the crypto industry. He suggests that the market should be subject to similar time-tested regulations focused on the protection of customer assets, surveillance of trading activity, prohibitions on conflicts of interest, and the imposition of stringent cybersecurity standards.

Moreover, lawmakers posed questions to the Commodity Futures Trading Commission Chair and a panel of industry experts. During the hearing, Behnam emphasized the need for more congressional authority to address crypto risks and establish clear policies.

Behnam noted that there is a “regulatory vacuum” and a “gap” in regulation over digital commodity assets and that while the CFTC and Securities and Exchange Commission should not avoid charging entities in violation of existing law, there is a need for more congressional authority to address these risks. He expressed concern that the current enforcement approach, which he described as “regulation by enforcement,” is not an appropriate way to govern a market, adequately protect customers,

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Author: Ronaldo Marquez

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