US Regulator Warns of Oversight Gaps in Crypto Oversight

The outgoing chair of the Commodity Futures Trading Commission (CFTC), Rostin Behnam, has emphasized the need for comprehensive oversight of digital assets. In a recent interview, Behnam highlighted the risks posed by an unregulated crypto landscape, citing the increasing adoption of digital assets by both retail and institutional investors.

The Current Regulatory Landscape

While the CFTC has jurisdiction over commodity derivatives markets, including Bitcoin futures, much of the crypto spot market remains outside its purview. Behnam argued that many digital assets qualify as commodities and should fall under the CFTC’s oversight. He called for Congress to grant the agency authority over cash markets for digital commodities, positioning the CFTC as a “natural fit” to regulate this sector.

CFTC’s Enforcement Actions

Under Behnam’s leadership, the CFTC took harsh enforcement actions against major crypto players. Notably, the agency’s lawsuit against Binance, the world’s largest cryptocurrency exchange, and its CEO Changpeng Zhao resulted in a $4.3 billion settlement. This case alleged that Binance operated illegally in the US, circumventing compliance controls to maximize profits.

CFTC v/s SEC: A Turf War Over Crypto Oversight

The regulatory landscape for cryptocurrencies in the US is complicated by jurisdictional overlap between the CFTC and the Securities and Exchange Commission (SEC). Current SEC Chair Gary Gensler asserted that most digital tokens are securities subject to his agency’s rules. This ongoing debate has created confusion among market participants and hindered efforts to establish clear regulatory guidelines.

The Need for Legislative Action

Behnam has consistently advocated for legislative action to clarify the roles of the CFTC and SEC in regulating digital assets. He estimates that up to 70% of digital assets should be classified as commodities, leaving security tokens under SEC oversight. Recent legislative proposals aim to formalize this division, but progress has been slow amid political gridlock.

Ongoing Leadership Changes at SEC

Meanwhile, US President-elect Donald Trump will have the opportunity to fill two vacant seats at the SEC, potentially resulting in a Republican-majority SEC that is more aligned with Trump’s campaign promise to make America “the crypto capital of the planet.” The crypto industry’s successful lobbying efforts to block the renomination of Democratic Commissioner Caroline Crenshaw underscore the growing influence of crypto advocacy groups in shaping regulatory policy.

Conclusion

The crypto industry is likely to face further scrutiny as regulators seek to address the gaps in oversight. The CFTC’s outgoing chair, Rostin Behnam, has emphasized the need for comprehensive regulation, and the agency’s enforcement actions against major crypto players demonstrate its commitment to oversight. As the regulatory landscape continues to evolve, it is essential for market participants to stay informed and adapt to changing regulatory guidelines.

Source: 99bitcoins.com

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