After the FTX collapse, the U.S. Commodity Futures Trading Commission’s (CFTC) jurisdiction urges Congress to act fast on the crypto regulation.
The official CFTC site stated that “Unlike other federal financial regulators, the CFTC lacks the necessary and direct authority to write rules and to oversee this marketplace. The CFTC does not have direct statutory authority to comprehensively regulate cash digital commodity markets; instead, the Commission’s jurisdiction resides with its more limited fraud and manipulation enforcement authority.”
Notably the CFTC has brought more than 60 enforcement cases in the digital asset space since 2014, with total penalties of just over $820 Million. In fiscal year 2022, more than 20% of CFTC’s 82 enforcement actions involved digital assets.
CFTC Chair’s Statement
The CFTC is an independent federal regulatory agency tasked with overseeing the U.S. derivatives markets. On December 01, 2022, the CFTC Chair, Rostin Behnam argued that the collapse of FTX might not have happened if the crypto exchange was under the Commodity Futures Trading Commission’s watch.
CFTC Chair Rostin Behnam testified before the Senate Agriculture Committee at the first of several congressional hearings expected on FTX, said that CFTC couldn’t have prevented the collapse because FTX wasn’t an entity regulated by CFTC..
Mr. Behnam asked the lawmakers for broader authority that will directly watch and direct spot cash market exchanges, as the exchanges are currently not regulated by any federal agency. However, it must be noted that the tokens deemed securities are supervised by the Securities and Exchange Commission or SEC.
In addition, most of the Senators seemed confused as they didn’t make much of a distinction between FTX US, the company operating within the U.S., and FTX.com, the global exchange based in the Bahamas.
While FTX.com faces broader issues, including apparently sending customer and corporate funds to Alameda Research, a trading firm that’s affiliated with FTX.
Mr. Behnam remarks that the Digital Commodities Consumer Protection Act (DCCPA) would have banned the commingling of customer and corporate money and also require better corporate governance and actual bookkeeping. Such sort of activity would have been prohibited if the DCCPA, the bill sponsored by committee heads senators Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.), had been in effect.
Mr. Behnam advised revisiting the bill to ensure it addresses possible misconduct that may occur at other companies.
Furthermore, as per the recent update, Mr. Behnam shifted his stance and said only Bitcoin is a commodity, not Ethereum, at a crypto event at Princeton University.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/12/02/cftc-chair-digital-asset-markets-lack-the-basic-protections/