Rustin Behnam, Chairman of the US Commodity Futures Trading Commission (CFTC), highlighted his agency’s activity in the cryptocurrency space and the need for updated legislation at the Financial Industry Association’s Expo 2023 event in Chicago. He described the CFTC Enforcement Division’s efforts as a “continuous drumbeat.”
In the transcript of his keynote address to the industry group, Behnam recounted the $6 billion his agency collected in penalties in fiscal year 2023. He added:
“45 of these [enforcement] Actions this fiscal year involved misconduct related to digital assets, accounting for more than 34% of the 131 cases brought by the Commission since 2015.
Behnam pointed to the “precedent-setting lawsuit” his agency won against the Ooki DAO, which led to the decentralized autonomous organization (DAO) being shut down and a $643,542 fine. In its default judgment against Ooki DAO, the US District Court for the Northern District of California found that DAO was a “person” under the Commodity Exchange Act (CEA) of 1936.
Behnam returned to CEA when he discussed the agency’s future direction. “The cornerstone of our latest era is the disintermediation brought about by groundbreaking technology: DeFi, AI, standard Wi-Fi,” he said, but:
“The boundaries at CEA that were essentially set in another era create real barriers to engaging in rulemaking and policies that are essential to our mission, but are immediately outside our scope.”
Moreover, those limits “force[e] Agency to engage in increasingly resource-intensive tasks to obtain assurances that we are acting within the bounds of our intended jurisdiction.
– Rustin Behnam (@CFTCbehnam) October 2, 2023
Vertical integration — “the growth of the electron and the promise of decentralized finance” — is happening across financial markets and is leading to regulatory concerns, and “customer protection means something different now,” according to Behnam.
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Behnam’s comments stand in sharp contrast to the position of Securities and Exchange Commission Chairman Gary Gensler, who believes that Depression-era financial regulation “has been extremely beneficial to investors and economic growth over the past 90 years” and should not be tampered with.
Behnam also indirectly addressed limitations on the CFTC’s enforcement authority. “To suggest that […] We must wait until victims suffer and cry out for help so we can be proactive […] “It undermines our mission and purpose.” “I have continued to advocate for additional authority in the cryptocurrency space,” he later added.
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