Rostin Behnam, chairman of the U.S. Commodity Futures Trading Commission (CFTC), said Congress should act quickly on crypto. He also invited to enact legislation to regulate cryptocurrencies. According to Behnam, following the collapse of the FTX cryptocurrency exchange and the consequent loss of client funds, he said before the US Senate Committee that there is a need to enact strict and uniform standards in the field of digital markets. The regulator pointed out that if the crypto sector is not brought under control, the effects could spread to the overall financial system.
“The events of the past few weeks embody, most sadly, the dangerous state of the digital asset market. I believe we need to act quickly with a thoughtful regulatory approach to build railings in rapidly growing and evolving risk markets. Otherwise they will remain as an unsafe venture for customers. They will pose an increased risk to the wider financial system.”
Behnam also stated that there is a need for a transparent structure that can regulate digital assets. Specifically, he made calls for clarity between the CFTC and the SEC about the right body to manage crypto oversight.
“Failure to act will leave consumers investing in digital assets largely unprotected. Unlike other federal financial regulators, the CFTC does not have direct authority to write and oversee the rules. With nominal barriers to entry for consumers, legitimate market forces have been replaced by massive speculative interest. This has put the American people at significant risk.”
It’s worth noting that Wyoming Senator Cynthia Lummis’ comprehensive crypto regulation bill seeks to clarify the right regulatory body.
Additionally, the CFTC recommends that cryptocurrency exchanges wishing to serve retail investors should register with a federal market regulator. Part of the regulation is aimed at companies, segregation and protection of client funds. It will force maintaining sufficient capital to operate them and outlining public disclosures supported by independent accounting.