At the recently held Futures Industry Association Expo 2023 conference, Rostin Behnam, the current chair of the US Commodity Futures Trading Commission (CFTC), underscored the urgent need for comprehensive regulations within the budding crypto industry.
A Track Record of Monitoring Digital Assets
Behnam highlighted that since 2015, the CFTC’s Enforcement Division has doled out 131 monetary awards. Astonishingly, 45 of these were directly related to digital asset fraud. This accounts for an alarming 34% of the total awards granted during this period.
An Analogy to Ponder
Taking an illustrative approach, Behnam remarked, “If you require an analogy, think about whether you would be comfortable on the road if only some individuals were required to have a driver’s license, or whether, given the choice, you would entrust your healthcare to an untrained, or unlicensed physician.”
The Crypto-Commodity Classification
Behnam’s deep dive into the current state of the crypto world led him to conclude that nearly 70% of cryptocurrencies should be categorized as commodities. In light of this, he strongly urged Congress to develop clear-cut regulations for these digital assets and concurrently expand the CFTC’s jurisdiction to oversee them more effectively.
Decentralized Finance: A Sector in Need of Oversight
One of the areas Behnam expressed significant concern about is decentralized finance (DeFi). He equated unregulated DeFi platforms to “unlicensed doctors,” highlighting the inherent risks associated with their operation.
His call for regulation isn’t new. In the past, he has approached the US House of Representatives, seeking augmented powers to address pressing issues such as exchange collapses, market manipulations, and glaring cybersecurity vulnerabilities.
A Developing Regulatory Landscape
As the crypto sector awaits a more defined regulatory blueprint, the Securities and Exchange Commission (SEC) has hinted at potential reforms. These amendments may necessitate protocols to register either as official exchanges or as brokers.