CFTC Chair Behnam Urges Congress to "Fill the Regulatory Gap" on Digital Assets
Commentary by Steven Lofchie
In testimony before the US Senate Agriculture Committee, CFTC Chair Rostin Behnam urged members to "fill the regulatory gap" for non-security digital assets.
Chair Behnam asked the Senators to grant the CFTC the authority and resources to regulate the market effectively. He warned that "concerns regarding broader market resiliency and perhaps even financial stability will ripen" and that "the current [regulatory] trajectory is not sustainable," particularly "as the digital asset market continues to integrate into traditional financial institutions."
He recommended legislative steps to ensure (i) a principles-based regulatory framework, (ii) appropriate agency funding, (iii) comprehensive disclosure requirements and (iv) robust anti-money laundering measures. He also highlighted the need for clear guidelines to distinguish between commodities and securities, as well as the importance of greater public education on digital assets.
Mr. Behnam noted current CFTC enforcement efforts, saying that the CFTC is "committing nearly half its enforcement resources to a market it does not have the authority or appropriated resources to regulate." Mr. Behnam reiterated that "legislation [should] provide comprehensive authority for anti-money laundering, know-your-customer, and a customer identification program, built off of existing requirements for market participants."
Commentary
Chair Benham's remarks are reasonable, but avoid the big question: "what is a non-security digital asset?" So long as the SEC claims jurisdiction over virtually all digital assets, there is not much for the CFTC to do, unless it wants to fight a jurisdictional battle with the SEC.