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Testifying before the Senate Agriculture Committee, CFTC
Chairman Rostin Behnam said there was an urgent need for
Congress to grant additional authority and resources to his
agency to better monitor the rapidly growing digital currency
market.
"In essence, this is an unregulated market," he said. "There is
so much that we are not able to see because of this limited
authority."
Behnam's comments follow a letter he sent on Tuesday to
Congress, in which he emphasized the agency's focus in
mitigating risk to individual investors and promoting market
integrity as core reasons why it should be a central player in
any crypto regulatory regime.
Lawmakers in Congress and the Biden administration are trying to
set up a new regulatory structure for digital currencies, with
the Securities and Exchange Commission also engaging in several
projects to boost scrutiny of the new products.
"We can’t afford to wait until the next crisis. Congress must
work with regulators and the Biden administration to design a
framework that protects consumers and our environment and keeps
our markets fair, transparent and competitive," said U.S.
Senator Debbie Stabenow, chairwoman of the Senate Agriculture
Committee. "The CFTC will play a key role in that effort."
Behnam also suggested the participation of retail investors in
digital asset markets highlights the urgency for comprehensive
crypto regulations, noting that recent studies indicate the
amount of retail participation in the digital asset futures
market is "more than double" other futures markets.
He added that the CFTC's lack of authority to oversee digital
asset markets could be contributing to increasing fraud within
the space. Although the CFTC has previously levied charges
against major crypto players including Bitfinex and Tether,
Behnam said it has been hard for the agency to supervise crypto
exchanges operating outside of the United States.
U.S. regulators have so far focused most of their crypto
regulatory efforts on stablecoins
https://www.reuters.com/markets/
europe/stablecoins-steal-limelight-subdued-bitcoin-2021-12-13,
which are digital assets whose value is supposed to be pegged to
traditional currencies. Regulatory officials have said
stablecoins lack proper transparency around the stability of
their reserves, making them susceptible to runs.
In November, a U.S. Treasury-led working group recommended
Congress pass a law https://www.reuters.com/world/us/us-treasury-issue-stablecoin-report-paving-way-new-rules-2021-11-01
specifying stablecoins should be issued only by companies that
have insured deposits, like banks.
(This story corrects name of committee in paragraph 2)
(Reporting by Hannah Lang and Pete Schroeder in Washington;
Editing by Paul Simao and Matthew Lewis)
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