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CFTC Chairman Calls for Action on Bitcoin Regulation Amid Ongoing Turf Wars

CFTC Chairman Calls for Action on Bitcoin Regulation Amid Ongoing Turf Wars

Dec 13, 2023

CFTC Chairman Calls for Action on Bitcoin Regulation Amid Ongoing Turf Wars

In a recent interview, Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam urged for greater regulatory clarity in the digital asset space, highlighting the unchanged landscape since the collapse of cryptocurrency exchange FTX.

Speaking with CNBC’s Becky Quick, Chairman Behnam expressed his concern over the protracted process in determining regulatory jurisdiction over digital assets. Echoing sentiments from Circle CEO Jeremy Allaire, he noted the persistence of a "turf war" amongst regulators and the slow progress in establishing clear oversight.

Despite multiple discussions with Congress, Behnam emphasized the existence of a regulatory gap that lawmakers must address to prevent legitimizing technologies that may not be sustainable. The proliferation of cryptocurrencies and associated price fluctuations underscore the permanence of digital assets in the financial ecosystem, raising concerns about customer fraud, market manipulation, and use by terrorist organizations.

Behnam identified a three-pronged approach to the issue: tackling anti-money laundering (AML) and know your customer (KYC) requirements, resolving stablecoin regulation, and addressing market structure concerns. He highlighted recent efforts to elevate issues with Binance and its alleged engagement in illegal activities.

Distinguishing his perspective from that of SEC Chairman Gary Gensler, Behnam pointed to the trading of products on CFTC-regulated markets and the legal precedent that categorize bitcoin as a commodity. This classification, he argues, reveals a regulatory void that Congress must fill.

Despite the seriousness of the regulatory challenges, Behnam clarified that relations between the CFTC and SEC are amicable, united by a common goal to protect markets and consumers. The focus remains on adapting decades-old laws to the evolving technological landscape.

On the matter of Binance and its settlement, Behnam highlighted the significant fines totaling over $4 billion imposed by the CFTC, DOJ, and Treasury. Without delving into specifics, he indicated that the US government had successfully targeted a malicious actor, with criminal sentencing on the horizon.

Behnam’s call to action is a clear indicator of the urgency felt by regulators in addressing the complexities of digital asset oversight. The interview underscores the need for legislative intervention to provide a structured and secure environment for the burgeoning cryptocurrency market, ensuring consumer protection and legal compliance.

One has to wonder whether or not the CFTC and SEC are equipped to regulate effectively and without eroding individual liberties. Especially as they pertain to using bitcoin in a self-sovereign and private manner. The heavy focus on KYC/AML compliance is disconcerting considering the fact that KYC/AML laws have proven to be wholly ineffective and put individuals in harm's way by forcing unqualified counterparties to store sensitive personal identifying information.

Millions of people are using bitcoin as money today. Bitcoin is intended to be used as money and the squabbling between the CFTC and SEC reads more like a power grab than an actual attempt to define bitcoin appropriately.


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