CFTC ‘well-positioned’ to fill regulatory gap in crypto: Behnam

Turmoil in cryptocurrency markets suggests action is needed and the Commodity Futures Trading Commission is “well positioned” to fill regulatory gaps in cryptocurrency markets if Congress so chooses, said the agency’s chairman.

The agency is also “working towards a strong year of precedent-setting cases,” following the spectacular crash of crypto exchange FTX and the failures of other companies over the past few months, said CFTC Chairman Rostin Behnam.

“Bankruptcies, failures, and walks only validate necessary action,” Behnam said at a meeting of the American Bar Association. “The ecosystem is vast, not going away, and requires comprehensive legislation.”

Lawmakers introduced bills last year to regulate crypto including the Digital Commodity Consumer Protection Act, or DCCPA. the bill has the backing of former FTX CEO Sam Bankman-Fried and will authorize commodity agents to regulate digital assets. The bill needs to be reintroduced this year.

Behnam said the CFTC will continue to work with new stakeholders.

The enforcement train roared

To date the agency has conducted 69 enforcement actions involving digital assets, which Behnam says demonstrates the “extraordinary capacity” of its staff.

Some of the prominent cases include firsts for the agency, such as complaint filed a lawsuit against Ooki DAO in September alleging it was running an illegal futures exchange.

Along with the Securities and Exchange Commission, the agency also filed a civil lawsuit in December against FTX, Bankman-Fried, and Alameda Research for misusing customer funds. The Department of Justice is separately pursuing a criminal case against Bankman-Fried.

Behnam said the agency’s Market Oversight Division is considering whether designated contract markets that list crypto-based derivative contracts, or are affiliated with spot crypto markets, should adopt policies to restrict trading by certain employees. Designated contract markets, or DCMs, are companies that allow trading in derivatives.

Cyber ​​is an “increasingly pressing issue”

Cyber ​​risk will get its own rules, Behnam said.

“The growth of cybersecurity threats against financial institutions is well documented and widely recognized as an important and increasingly pressing issue,” said Behnam.

The agency has also brought cases against the company for not following certain cybersecurity policies. In 2019, a company settled lawsuits with the CFTC after the agency said it allowed cybercriminals to penetrate email systems and failed to disclose the breach to customers in a timely manner.

Behnam’s remarks came after the derivatives trading arm of financial firm Ion Markets was hacked earlier this week, affecting its activities.

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