WASHINGTON—The nation’s prime derivatives regulator is testifying Wednesday about cryptocurrencies earlier than a congressional panel that’s weighing the necessity for brand spanking new laws to deliver the unstable asset class beneath authorities oversight.
Rostin Behnam,
the not too long ago confirmed chairman of the Commodity Futures Buying and selling Fee, is showing earlier than the Senate Agriculture Committee for a listening to analyzing dangers, regulation and innovation within the cryptocurrency business. Extra witnesses embrace billionaire cryptocurrency entrepreneur
Sam Bankman-Fried.
Regulators within the Biden administration have likened the $1.7 trillion cryptocurrency market to the Wild West and stated it lacks the safeguards that defend traders in shares, bonds or commodities. However they’ve struggled to use the decades-old legal guidelines that govern these markets to the cryptocurrency business, which is furiously lobbying Washington to keep away from being regulated by the Securities and Trade Fee.
Each the CFTC and SEC cracked down on cryptocurrency tasks and buying and selling platforms they’ve thought-about to be breaking the legislation or defrauding traders.
However neither company has sought to completely oversee the 2 largest cryptocurrencies: bitcoin and ether. Collectively the 2 characterize greater than 60% of the whole market.
That’s partly as a result of many legal professionals imagine the 2 belongings are, for authorized functions, commodities that fall exterior the SEC’s jurisdiction, and partly as a result of the CFTC solely has the facility to control derivatives, versus spot markets.
“There is no such thing as a one regulator, both state or federal, with ample visibility into digital-asset commodity buying and selling exercise to completely police conflicts of curiosity and misleading buying and selling practices impacting retail clients,” Mr. Behnam stated in ready testimony.
The highest-ranking Republicans and Democrats on each the Home and Senate agriculture committees despatched Mr. Behnam a letter final month asking whether or not he noticed any shortfalls within the CFTC’s skill to police cryptocurrencies. “It’s crucial that clients are protected against fraud and abuse and that these markets are honest and clear,” the lawmakers wrote.
Mr. Behnam has beforehand stated the CFTC is ready to take a bigger function. However he has famous that will require Congress increasing the company’s authority by laws, in addition to its funding.
Cryptocurrency lobbyists have urged the Senate Agriculture Committee, which oversees the CFTC, to say its jurisdiction over their business and keep away from ceding regulatory turf to the SEC. They are saying the SEC’s guidelines for conventional securities like shares and bonds can be unattainable for many cryptocurrencies and buying and selling platforms to adjust to.
“I anticipate a number of members to make arguments for CFTC authority,” stated Michelle Bond, head of the Affiliation for Digital Asset Markets, in an emailed assertion. “This would be the first complete public listening to on digital belongings for the members who’re nonetheless formulating their views on digital belongings.”
Write to Paul Kiernan at paul.kiernan@wsj.com
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