Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam said Wednesday that CFTC-led regulation could have significant benefits for the crypto industry, including a potential boost to the price of bitcoin.
“Growth might occur if we have a well-regulated space,” Behnam told attendees during a fireside chat at NYU School of Law. “Bitcoin might double in price if there’s a CFTC-regulated market.”
Behnam has consistently argued for the need to provide market participants with regulatory clarity – something that many in the crypto industry have argued is lacking. For years, the CFTC and the U.S. Securities and Exchange Commission (SEC) have squabbled over the role of top regulator for the crypto industry, both reluctant to issue much in the way of formal guidance for crypto companies, choosing instead to set regulatory precedent through enforcement actions.
A clear regulatory framework, Behnam argued, could pave the way for institutional investors to enter the market.
“These incumbent institutions in the crypto space see a massive opportunity for institutional inflows that will only occur if there’s a regulatory structure around these markets,” Behnam said.
“Non-bank [crypto] institutions thrive on regulation, they thrive on regulatory certainty, they thrive on a level playing field,” Behnam added. “And they may say otherwise, they might bicker about the type of regulation – but what they love most is regulation because they are the smartest, the fastest and the most well-resourced. With those attributes, they can beat everyone else in the market.”
Settling the debate through legislation
A bipartisan bill introduced by the leaders of the Senate Agriculture Committee, which oversees the CFTC, would crown the CFTC the primary regulator for the crypto industry, expanding the agency’s authority to oversee crypto spot markets and requiring crypto trading firms to register with the CFTC – though it stopped short of explicitly defining where one agency’s purview ended and the other’s began.
Behnam said on Thursday that he supports the bill, which includes a provision that would allow the cash-strapped agency to levy fees on regulated entities – something Behnam argued would be critical if CFTC is to tackle the challenge of regulating crypto.
“We are [currently] appropriated money by Congress, and it has put us in a position where we feel like we’re constantly on edge about how much money we will be appropriated,” Behnam said. “We are still feeling the wounds and scars from about five or six years of flat funding.”
The CFTC’s battle with the dual issues of jurisdiction over crypto markets and its comparatively small operating budget has impacted its ability to effectively deal with crypto crime, Behnam told the audience on Thursday.
“We’re only touching the tip of the iceberg,” Behnam said. “The 60 or so cases [the CFTC has] brought, we’ve had to solely rely on whistleblowers, on customer complaints and on tips coming to us.
“We don’t have the traditional surveillance tools, the market oversight tools, to monitor trading platforms, to oversee broker-dealers or similarly-situated intermediaries … [T]hose are the types of things we fall a little bit short on, not because of lack of effort but because of a lack of jurisdiction,” he added.
UPDATE (Sept. 28, 2022): Corrects that the speech was Wednesday, not Thursday.