CFTC Chair Behnam Affirms Agency Competence to Regulate Digital Assets

CFTC Chair Rostin Behnam argued that the CFTC is the best regulator for digital commodities.

In an interview with Georgetown Law Professor Chris Brummer at DC Fintech Week 2022, Mr. Behnam stated that while the digital asset markets have matured in the last few years, such markets are not very different from the commodity futures and financial derivatives markets that the CFTC traditionally oversees. Mr. Behnam emphasized that the CFTC's principles-based regulatory approach is well-suited to adapt to digital asset markets and technological developments, and adaptation will be necessary on the part of regulators of both commodity markets and equity markets. Regarding jurisdiction over spot markets, Mr. Behnam reiterated (i) that federal courts have issued clear decisions determining Bitcoin to be a commodity, (ii) that Ether is a commodity to be regulated under the CFTC's jurisdiction and (iii) that Congress should grant the CFTC statutory authority over commodity digital tokens generally. Mr. Behnam also highlighted the CFTC's disclosure regime with respect to FCMs, CTAs and CPOs.

Mr. Behnam reviewed two aspects of the CFTC's jurisdiction: (i) civil enforcement and (ii) market oversight. Mr. Behnam said that the CFTC was "quite active" in bringing enforcement actions against digital asset market participants even with its limited jurisdiction. He emphasized various enforcement tools, such as civil monetary penalties and disgorgement, as mechanisms for customer protection and to ensure the quality of the digital asset markets. Mr. Benham also explained that digital assets pose unique regulatory enforcement challenges, particularly with respect to retail customers (rather than institutional customers) noting that technology is generally disrupting markets and lowering barriers to access. Mr. Behnam said that the CFTC has taken steps to adapt to these market developments and has focused more on comprehensive education of retail customers regarding the risks posed by CFTC-regulated markets. He cited several additional steps including (i) the internal reorganization of the CFTC to prioritize customer education within the Office of Public Affairs and (ii) the appointment of the CFTC's first Chief Diversity Officer.