Congress’s agriculture committees request information on digital assets from the CFTC

The US House and Senate Agriculture Committees sent a letter to the chair of the Commodities Futures Trading Commission requesting more information on digital asset marketplaces. 

The Senate confirmed CFTC chair Rostin Benham on Dec. 15. Benham served as acting chair during the transition of the Biden administration and served as a commissioner since 2017. He replaced Heath Tarbert, who many in the crypto industry saw as an ally. 

Now, the agriculture committees are asking Benham to report on the growth of the crypto industry and determine how empowered the CFTC is to step in when that growth endangers consumers. The letter details the CFTC’s history with crypto, including its presumption that bitcoin and ether constitute commodities. It also reiterates that the CFTC is empowered to bring enforcement actions against digital asset marketplaces through the Commodity Exchange Act.

It details specific risks in the space, asserting that there has been an uptick in consumer reports of losses to crypto scams. The letter also points out that decentralized finance (DeFi) protocols present an opportunity for more frictionless services, but regulators have yet to fully address the risks DeFi presents. 

“However, there are still questions about who is responsible for monitoring DeFi markets for fraud and manipulation, safeguarding customer
funds, and ensuring parties meet their obligations to one another,” said the letter. “We also are concerned about any DeFi protocols offering derivatives contracts on unregistered exchanges—the subject of a recent CFTC enforcement action.”

To better understand how Congress can help address these concerns, the letter includes eight questions for the chair. Those questions ask the CFTC to estimate the size of the digital asset space as a whole and its US participants, as well as compare and contrast it to the traditional finance space. It also requests information on any collaboration the agency has with digital asset stakeholders and other agencies working to regulate the industry and questions whether the Commission’s current authorities are enough to protect consumers in the digital asset space.

“The CFTC has a critical role to play to ensure the integrity of digital asset markets,” said the letter. “While some of these technologies have the potential to modernize the financial system, it is imperative that customers are protected from fraud and abuse and that these markets are fair and transparent.”