CFTC Commissioner Johnson Calls for Comprehensive Regulation over Crypto Markets

Steven Lofchie Commentary by Steven Lofchie

CFTC Commissioner Kristin N. Johnson called for improved corporate governance and comprehensive regulation for the crypto markets.

In an address before the Blockchain Association's Policy Summit, Commissioner Johnson highlighted recent enforcement actions in the crypto space, including the $4.35 billion penalty imposed on Binance (see previous coverage). She emphasized that many enforcement matters do not involve allegations that defendants engaged in fraud or similar misconduct, but rather concern failures to comply with Commission laws and regulations applicable to registered market participants. She said that the Binance consent order imposed significant compliance obligations on Binance, including board independence and enhanced KYC/AML procedures.

Commissioner Johnson reiterated that the CFTC has broad enforcement jurisdiction in interstate transactions involving any commodity, including exclusive jurisdiction to regulate derivative transactions as to commodity derivatives contracts. She noted a 20 percent increase in enforcement actions year over year which included cases against DeFi platforms that transacted in leveraged and margined retail commodities.

Commissioner Johnson argued that enforcement actions were not a substitute for comprehensive regulatory reform and a tailored crypto regulatory regime. She advocated for a well-defined rulemaking process to impose more requirements on crypto-intermediaries. She argued that it was imperative that post-crisis corporate governance reforms address identified concerns. She described the need to protect against customer and creditor losses resulting from companies seeking bankruptcy protection when faced with enforcement actions.


The real need is for a workable set of regulations applicable to cash market transactions in digital assets.  SEC Chair Gensler has made clear that he has no interest in developing such regulations, so progress on that front, if there is to be any, must await a new SEC Chair.

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