Rostin Behnam, Chair of the US Commodity Futures Trading Commission (CFTC), has refuted claims that his agency would be a “light touch regulator” for cryptocurrency. Speaking at a House Agriculture Committee hearing, Behnam was asked about opinions that the CFTC is seen as taking a lighter touch when it comes to regulating the crypto industry. However, Behnam argued that the CFTC is a principles-based regulator, which means that it moves away from detailed, prescriptive rules and instead relies on broadly-stated principles. According to Behnam, this approach does not make the CFTC a “light touch regulator.”
New legislation on the horizon
The CFTC’s regulatory approach to cryptocurrency has come under scrutiny as lawmakers contemplate legislation to regulate the industry. At the hearing, lawmakers asked Behnam about a discussion draft released the previous week, which seeks clarity on when a digital asset would be considered a security and thereby regulated by the Securities and Exchange Commission (SEC). The draft also aims to create a process on how digital assets are treated and how intermediaries can register with the SEC or the CFTC. Rep. David Scott asked Behnam to estimate how long it would take to implement new rules for crypto between the SEC and CFTC. Behnam replied that with additional funding, it would take at least one to two years, but without that funding, it would take closer to three to four years.
Active litigation causes confusion
Behnam was also asked about the SEC’s lawsuit against Coinbase on Tuesday, which named 13 cryptocurrencies as securities, and whether those were properly classified as securities. Behnam declined to answer, citing the active litigation. However, he acknowledged that confusion and uncertainty in the market were a concern, and that there were a number of active cases that were ongoing. Behnam expressed hope that some of these differences could be resolved in the future.
In summary, Behnam has denied that the CFTC is a “light touch regulator” for cryptocurrency, arguing that its principles-based regulation approach is not a synonym for laxity. Meanwhile, lawmakers are considering legislation to regulate the industry, with a discussion draft released last week aiming to clarify when a digital asset is considered a security and how it is regulated. The lack of clarity has caused confusion and uncertainty in the market, with active litigation adding to the complexity of the situation. While Behnam did not comment on the SEC’s lawsuit against Coinbase, he acknowledged that resolving these differences in the future is a priority.