Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam said last week that CFTC-led regulation of the cryptocurrency market could have great benefits for the crypto industry, including potentially boosting bitcoin’s price.
Attracted by prospects
“Growth might occur if we have a well-regulated space. Bitcoin might double in price if there’s a CFTC-regulated market,” Behnam said during a fireside conversation at the School of Law of the New York University.
Behnam has repeatedly claimed that it is necessary to provide market participants with regulatory clarity – something many believe the crypto industry lacks. For several years, the CFTC and the US Securities and Exchange Commission (SEC) have quarreled over their role as the crypto industry’s primary regulator. They have both been reluctant to issue formal guidance to cryptocurrency companies, preferring instead to set regulatory precedent based on enforcement actions.
Behnam believes that a clear regulatory framework could provide the opportunity for institutional investors to enter the market.
“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 said.
“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,” Behnam commented.
Solving the dispute via legislation
The leaders of the Senate Agriculture Committee, which oversees the CFTC, have introduced a bipartisan bill. It would make the Commission the primary regulator of the crypto industry. It would expand the agency’s authority to oversee the crypto spot markets and include requirements implying that crypto trading firms must register with the CFTC.
Behnam stated his support for the bill, which includes a provision that allows the cash-strapped agency to charge regulated entities – which Behnam said would be crucial if the CFTC were to solve the problem of regulating cryptocurrencies.
The Commission’s battle with dual jurisdictional problems over cryptocurrencies with a relatively small operating budget has affected its ability to effectively combat cryptocurrency crime, Behnam said. Indeed, according to the executive, Congress is allocating too little budget to the Commission, and so far the vacant niche of cryptocurrency regulation is quite a tidbit. However, the SEC already has a much bigger opportunity right now.
“We’re only touching the tip of the iceberg. The 60 or so cases the CFTC has brought, we’ve had to solely rely on whistleblowers, on customer complaints and on tips coming to us,” Behnam commented.
“We don’t have the traditional surveillance tools, the market oversight tools, to monitor trading platforms, to oversee broker-dealers or similarly-situated intermediaries … Those are the types of things we fall a little bit short on, not because of lack of effort but because of a lack of jurisdiction,” he said.
