CFTC Benham wants more crypto oversight and sees its potential

Ross Benham, chairman of the CFTC, said institutions won’t enter the crypto market unless there is regulatory certainty.

Chairman Rostin Benham of the Commodity Futures Trading Commission made a pitch for greater regulatory oversight of the crypto sector at a fireside chat at the NYU School of Law, and also in an interview on CNBC.

The chairman posited that Bitcoin “might double in price if there’s a CFTC-regulated market, perhaps cocking a snook at the SEC, whose chairman Gary Gensler is trying to raise support to be able to regulate the vast majority of the crypto market.

In pushing the advantages of regulatory certainty Benham stated:

“These incumbent institutions in the crypto space see a massive opportunity for institutional inflows that will only occur if there’s a regulatory structure around these markets,”

He also affirmed:

“Non-bank [crypto] institutions thrive on regulation, they thrive on regulatory certainty, they thrive on a level playing field, and they may say otherwise, they might bicker about the type of regulation – but what they love most is regulation, because they are the smartest, the fastest and the most well-resourced. With those attributes, they can beat everyone else in the market.”

In his CNBC interview Benham said that he saw crypto as starting to behave in a similar manner to traditional markets, although there were “still gaps to be filled” by regulators.

He said that the CFTC mainly oversaw derivatives markets but that it also wanted to be granted the authority to be able to oversee cash markets, and he specified that this should include Bitcoin and Ether.

When the interviewers voiced that Gensler had called them securities, Benham would not be drawn but just said that they were a new asset class and that certain characteristics set them apart from traditional asset classes.

He referred to the 60 or 70 year-old case law that is still used to determine what is a security, and seemed to be leaning towards something newer in this respect, and appeared to be more than a little at odds with the SEC’s often stated views.

When the accusation that his agency’s differing opinions were contributing to a “turf war”, Benham responded that the CFTC and the SEC often worked together and that the goal was to create more certainty for markets and better protections for retail investors.

Benham said that regulation needed to be slow and deliberate in order to take in the potential for economic development and innovation, but at the same time his agency needed to assure market and customer protections.

Surprisingly, Benham stated towards the end of the interview that a lot of his time was spent on crypto at a time when a global commodity crisis is ongoing. To spend an inordinate amount of time on such a small asset class as crypto in the face of the huge disruptions to markets caused by the current economic crisis is perhaps indicative of just how seriously this regulator is taking the potential for crypto to start replacing various areas of traditional finance. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.