Chairman Rostin Behnam of the Commodity Futures Trading Commission (CFTC) has stated that CFTC-guided regulation with its knowledge and experience makes it the ideal regulator for the digital asset commodity market. He expressed that CFTC regulation could have a positive impact on the crypto industry and possibly amplify the price of bitcoin.
CFTC Regulation Could Amplify BTC’s Price
During a fireside chat at NYU School of Law, Behnam told attendees if there’s a CFTC-regulated market and a clear regulatory framework in place, Bitcoin’s price could double.
Thus it could pave the way for institutional investors to enter the market. He added a regulatory structure might pave the way to an enormous opportunity for institutional inflows in the crypto space.
He explained that non-bank institutions, including crypto exchanges, are the smartest, fastest, and known as most well-resourced market participants. Citing why these institutions lean towards regulatory certainty and thrive on a level of the playing field that outperforms everyone else in the market.
The Role Of The Agency In The Crypto Market
The Digital Commodities Consumer Protection Act of 2022 sponsored by the leaders of the Senate Agriculture Committee was introduced giving the CFTC the lead role to oversee the vast majority of the crypto market by value, including Bitcoin and Ethereum which are the largest tokens by far. It would appoint the CFTC as the primary regulator for the crypto industry, expanding the agency’s authority to oversee crypto spot markets and requiring dealers, brokers, custodians, and trading facilities to register with the CFTC.
Behnam has been vying for authority to regulate and outlined the ways in which his regulatory agency is distinctively positioned to supervise digital commodity spot markets. Behnam referred to it as the “cash digital asset commodity market”, emphasizing that digital assets should be viewed as commodities. Behnam added that CFTC would fill the gaps in crypto regulation.
Lack Of Resources A Big Issue For CFTC Regulation
Behnam explained that the CFTC’s struggle with the dual issues of crypto market jurisdiction and its comparatively small operating budget has made it difficult for the agency to effectively deal with crypto crime. The absence of traditional surveillance tools, market oversight tools, monitoring trading platforms, and supervising similarly-situated intermediaries are the challenges faced by the agency. He added that this is not because of lack of effort but because of a lack of jurisdiction and resources.
The CFTC has a current budget of about $1.47 billion. The amount isn’t enough as the agency has been overwhelmed without a substantial allocation of new funding from Congress. Behnam added that CFTC’s fund appropriation by Congress is in progress and constantly puts the agency on edge about how much money will be appropriated since flat funding has already been an issue in the past years. Meanwhile, some of the legislators are pushing for the regulators to levy fees that would fund the growth of the agency to regulate cryptocurrency as opposed to seeking budget appropriations.
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