Chair of the Commodities Futures Trading Commission Rostin Behnam has expressed concerns about the risks posed by the recent certification of spot bitcoin ETF products and has reiterated her desire for federal legislation regulating cryptocurrencies.
The Securities and Exchange Commission approved the first group of spot bitcoin exchange-traded funds two weeks ago, and since then, billions of dollars have been exchanged on these funds, according to Behnam.
Behnam stated in prepared remarks on Friday at an American Bar Association event, “I fear that the regulatory approval of bitcoin ETPs introduces risk that, in spite of yellow flags, market participants, retail and institutional alike, may mistake the technical approval of a product—with actual regulatory oversight of the cash commodity digital assets.”
Congress has not given any federal regulator jurisdiction over the digital asset cash markets, according to Behnam. Behnam has advocated time and time again for laws to help control cryptocurrencies. Over the past few years, lawmakers have worked to draft measures, one of which would essentially grant the CFTC greater authority over the cash market. However, the plan has not received the necessary support, with some calling it the “wish-list of big crypto.”
“The concerns I have publicly voiced for the better part of six years regarding the digital asset commodity spot market have only become magnified,” Behnam stated. “The need for federal legislation over cash market digital assets has never been more critical, and I will continue my call for action.”
Behnam stated that there isn’t a solid framework in place to “address the opaque and inconsistent practices in the cash markets for digital assets” with regard to matters like client safeguards and conflicts of interest.
“Instead, the ETPs have taken a speculative and volatile asset, wrapped it in a thin layer of indirect regulation, and packaged it as a shiny new product,” Behnam stated.
In 2023, Behnam claimed that his agency had become the “premier enforcement agency in the space” and he highlighted the efforts made in pursuing cryptocurrency criminals.
Out of 96 actions in total, the agency brought 47 connected to digital assets in the fiscal year 2023. Sam Bankman-Fried, the CEO of FTX, Changpeng Zhao, the CEO of cryptocurrency exchange Binance, and Alex Mashinsky, the CEO of Celsius, were among the prominent examples.
“As everyone in this room knows, we can only act on digital asset fraud or manipulation when we uncover or discover anomalies through regulated market surveillance and oversight, or through tips and complaints we can pursue,” Behnam stated. “We are doing all this—and making the headlines—with a restrictor plate installed,” Behnam stated. “Imagine what we could do if we were given the tools to open up the throttle?”