CFTC Chair Behnam Reviews Regulatory Priorities

CFTC Chair Rostin Behnam described the agency's ongoing regulatory and enforcement efforts "to address the expanding dislocation between regulation and innovation."

In an address before the 2023 FIA Expo, Mr. Behnam urged Congress to "address the lack of federal regulation over the digital commodity market." He described markets experiencing rapid vertical integration leading to combinations of market activities that raise regulatory issues. These include heightened risk of conflicts of interest, and concerns over compliance with capital margin and segregation requirements, among others. He noted the CFTC's recent request for comment on the impact of affiliations between CFTC regulated entities.

On enforcement, Mr. Behnam reiterated the CFTC’s commitment to a "culture of compliance. He noted that since 2015, digital assets-related misconduct made up 34 percent of the CFTC’s enforcement actions. He also cited a record of enforcement actions related to digital assets, DeFi registration, fraudulent schemes, business conduct and supervision (the latter over the use of technology or outsourcing to third-parties.)

Mr. Behnam also described anticipated rulemakings this year. These include:

• Climate Risk: To address increased volatility experienced by the agriculture and energy sectors, Mr. Behnam said that the CFTC Division of Market Oversight and Climate Risk Unit will propose agency guidance to ensure "integrity in the voluntary carbon markets."
• New Regulation: Mr. Behnam highlighted rulemakings on (i) swap dealer business conduct, (ii) operational resilience programs for futures commission merchants and swap dealers and (iii) expanding the types of permitted investments of customer funds by derivatives clearing organizations and FCMs.