The highest US derivatives watchdog has warned in opposition to a regulatory “hole” for cryptocurrencies and known as for extra scrutiny of political betting markets.
Rostin Behnam, chair of the Commodity Futures Trading Commission, instructed the Monetary Instances he would step down on January 20, the day of president-elect Donald Trump’s inauguration.
Behnam led the CFTC for 4 years because it finalised the primary federal tips for carbon offsets and deepened scrutiny of crypto and so-called occasion contracts, together with these permitting bets on elections. He oversaw the watchdog’s 2023 lawsuit in opposition to crypto change Binance, which led to a $4.3bn settlement with US authorities.
However Behnam instructed the Monetary Instances he was involved that regulation for digital belongings, which embody bitcoin and different cryptocurrencies, remained inadequate.
“You continue to have a big swath of the digital asset area unregulated within the US regulatory system and it’s essential — given the adoption we’ve seen by some conventional monetary establishments, the massive demand for these merchandise by each the retail and institutional traders — that we fill this hole,” Behnam mentioned.
He mentioned the CFTC remained “properly positioned to be a spot regulator for digital commodity belongings”. The chair, who has shut contacts and assist in Congress, has vowed to make use of his affect to maintain advocating for the company to take that position.
The CFTC has historically targeted on commodity derivatives, resembling futures and choices, moderately than commodities themselves. However Behnam has argued that many digital tokens qualify as commodities and that regulating money crypto markets could be a “pure match” for the company.
Trump has but to appoint Behnam’s successor, however the president-elect has embraced digital belongings and picked Paul Atkins, a crypto advocate, to guide the US Securities and Change Fee.
Behnam mentioned he supported “complete, robust regulation” for digital belongings.
However “it is necessary to not take short-cuts”, he added. “It’s essential to be very disciplined and intentional about how we write guidelines finally which are pushed from the regulation.”
Crypto was on the coronary heart of the CFTC’s highest-profile enforcement motion beneath Behnam, when one of many nation’s smaller regulators launched a lawsuit accusing Binance, the world’s greatest crypto change, and its chief govt Changpeng Zhao of working illegally within the US.
Behnam instructed the FT he was involved in regards to the legality and social affect of bets on political and different occasions, a brand new market that flourished throughout the election.
The CFTC in 2023 barred Kalshi, a retail-focused futures market, from providing contracts that allowed traders to guess on congressional elections. A US choose lifted the ban after the corporate sued the company.
“I’ve robust concern” round contracts associated to elections, assassination, terrorism and gaming, Behnam mentioned. As expertise and excessive retail demand drive development in these markets, “the road goes to be very blurred about what’s authorized, what’s unlawful”.
Behnam known as on his successor to deliver a “renewed focus” to the difficulty, “in order that now we have extra clear-cut traces of what we view as permissible and impermissible”.
