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January 22, 2022
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Lawmakers Ask The CFTC To Clarify Their Role Monitoring Crypto Risks

Bipartisan lawmakers from the U.S. House and Senate Agriculture Committees have requested clear info from the chair of the Commodities Futures Trading Commission (CFTC) concerning the crypto trade and their position in monitoring it and taking enforcement actions.

The CFTC chair Rostin Behnam intends to increase the regulator’s authority over the crypto market. Democrats and Republicans from the Senate and House Agriculture Committees agreed that the company performs a “important position“.

In a letter that Bloomberg described as “a rare show of bipartisanship in a divided Congress”, the lawmakers requested chair Benham to reply a number of questions so as “To understand the scope and size of digital asset markets, the benefits and risks presented by these emerging technologies” and “the role of the Commission with respect to these markets”.

“The CFTC has a critical role to play to ensure the integrity of digital asset markets. While some of these technologies have the potential to modernize the financial system, it is imperative that customers are protected from fraud and abuse and that these markets are fair and transparent.”

The lawmakers approached the dangers of the crypto trade and referred to as for the CFTC to widen their engagement to guard shoppers from losses and scams.

The letter particulars alleged dangers from the trade and reiterated that the CFTC is enabled by the Commodity Exchange Act to take enforcement actions for violations coming from digital asset marketplaces.

“Despite the CFTC’s responsible engagement, this industry is still subject to risks of abuse, including consumer fraud and cybercrime. Consumers reported losing nearly $82 million to 2 cryptocurrency scams between the fourth quarter of 2020 and first quarter of 2021, more than 10 times the amount from the same six-month period a year earlier.”

The lawmakers are additionally involved about dangers within the DeFi area and “any DeFi protocols offering derivatives contracts on unregistered exchanges”. However, they famous that “there are still questions about who is responsible for monitoring DeFi markets for fraud and manipulation, safeguarding customer
funds, and ensuring parties meet their obligations to one another.”

Related Reading | Did US Regulators Began Offensive Against Crypto Platforms? CFTC Fines Kraken

Authority Of The CFTC

In October 2021, throughout chair Rostin Behnam’s affirmation listening to, he appealed to Congress trying to increase the CFTC’s regulatory authority and said that the entity is able to be the “primary cop on the beat”

“the total size of the digital asset market was US$2.7 trillion and among that $2.7 trillion, nearly 60% were commodities. So with that in mind, I think it’s important for this committee to reconsider and consider expanding authority for the CFTC,”

Behnam’s assertion appeared to contradict Gary Gensler’s, chair of the Securities and Exchange Commission (SEC), who sees most cryptocurrencies as fairness. This has seemingly was a race amongst regulators to realize extra authority.

The SEC’s view on the right way to outline Ether has develop into unclear. If the 2 largest cryptocurrencies by market cap (BTC and ETH) will not be securities, then the SEC has a big measurement of the market out of regulatory attain.

However, the lawmaker’s letter outlined each Bitcoin and Ether as commodities, which might imply that each of those belongings fall beneath the CFTC’s jurisdiction.

“The CFTC has long considered certain digital assets to be commodities and courts have agreed. In fact, the two largest digital assets by market capitalization are commodities: Bitcoin and Ether. These two digital assets alone make up approximately 60% of the $2.7 trillion market. Futures contracts on Bitcoin and Ether are currently traded on CFTC-registered derivatives exchanges.”

Related Reading | How the CFTC effective on Coinbase may have an effect on future crypto firm itemizing

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Crypto whole market cap at $2.0 trillion within the every day chart | Source: TradingView.com

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