Markets
CFTC wants millions more to police crypto as cases account for 50% of workload – DL News
- The chairman of the US derivatives regulator has told lawmakers his agency needs more money to police cryptocurrencies.
- He was testifying as a senator teased new cryptocurrency legislation.
The U.S. derivatives regulator needs more power to police spot cryptocurrency markets and keep investors safe — but it also needs more money, its chairman told Congress on Wednesday.
In the fiscal year that ended in April, about 50% of enforcement actions brought by the Commodity Futures Trading Commission were against cryptocurrency companies, agency Chairman Rostin Behnam said.
That’s “a staggering statistic for an agency that oversees trillions of dollars of markets — having to allocate half of its resources to a market it doesn’t regulate and doesn’t appropriate funds for,” said Behnam, who spoke at a Senate Agriculture Committee hearing on Wednesday.
The CFTC, as the derivatives regulator, has limited authority over cryptocurrency spot markets.
Behnam told lawmakers that if the government decided to change that and give it full jurisdiction over cryptocurrencies, the CFTC would need more budget for staffing and cybersecurity.
If Congress passes the legislation, the CFTC would need an extra $60 million in the first year and about $35 million more in the second year as it waits for new revenue from cryptocurrency registrants to come in.
This is in addition to the CFTC’s normal budget.
Behnam asked Congress in April for $399 million and 725 full-time employees to fund the agency’s normal course of functions through 2025.
Join the community to receive our latest stories and updates
Committee Chairwoman Senator Debbie Stabenow called the hearing, during which she provoked a new cryptocurrency account This would give the CFTC more authority over cryptocurrency spot markets.
Stabenow said the bill would emphasize protecting retail investors and would also seek to adequately fund the CFTC. She said it will be submitted to committee members for review by the end of the week.
Limited resources
Behnam welcomed the idea of cryptocurrency legislation.
“If you measure the crypto economy by market cap, over 70% to 80% of the market is not securities, which means there is no direct federal oversight,” he said.
“So despite what some may believe, this leaves a giant gap — this vacuum — and ultimately customers at risk of losing money.”
The comment may have been in reference to Behnam’s colleague at the Securities and Exchange Commission, Gary Gensler, who believes that most crypto assets can be adequately policed under existing securities laws.
Behnam said, however, that while the CFTC welcomes more statutory authority, it will need commensurate resources.
Limited powers
The CFTC’s limited mandate over spot cryptocurrencies means that while it has a powerful enforcement program — bringing 135 actions against cryptocurrency companies in the past decade — Behnam said, it can only be reactive in protecting investors.
“We’ve never been able to be on the cutting edge of these situations. We’re always just responding to tips, complaints from individuals who have typically already been defrauded,” Behnam said.
A proper regulatory framework would require cryptocurrency companies to register with the CFTC, whether as brokers, exchanges or custodians, and subject them to a full disclosure regime.
“These are the types of regulatory tools that allow us to eliminate — if not significantly reduce — fraud and market manipulation,” Behnam said.
Contact the author at joanna@dlnews.com.