CFTC Chair Calls for ‘Expanding’ the Agency’s Authority as ‘Nearly 60%’ of Crypto Are Commodities

Rostin Behnam, the nominee to lead the Commodity Futures Trading Commission (CFTC), wants the agency to have greater authority over the crypto market and be the “primary cop on the beat.”

The CFTC is currently overseeing derivatives, but the Biden administration’s pick to head the CFTC said the explosive growth of digital tokens means their power needs to be increased as well. Behnam on Wednesday, during his confirmation hearing before the Senate Agriculture Committee, said,

“We’ve been one of the few cops on the beat because of limited statutory authority related to anti-fraud and anti-manipulation.”

Lawmakers should “consider expanding the authority for the CFTC.”

The US Securities and Exchange Commission (SEC) Chair Gary Gensler has also been urging congress to increase its power on the crypto sector.

In his testimony, Benham pointed out his agency’s recent enforcement actions that the CFTC had undertaken against crypto firms, including Bitfinex and Tether.

“This is the tip of the iceberg,” said Behnam, who further noted that the crypto market has grown to $2.7 trillion and that “nearly 60% were commodities.”

The CFTC Chair wants his agency and the SEC to work together to regulate the market, requesting “a regulatory structure for both securities and commodities.”

But Benham, who has been serving as the CFTC’s acting chairman since January, said the Senate Agriculture Committee should consider expanding CFTC’s jurisdiction further because of the industry’s size, the growing interest from retail investors, and threats it poses financial stability.

“It’s critically important to have a primary cop on the beat and certainly the CFTC is prepared to do that.”

Amidst the increased regulatory scrutiny, crypto trade associations reported a record lobbying spending in the third quarter, as per the disclosures filed with Congress.

The trend of lobbying has accelerated notably since the start of 2021 as the industry became the center of high-profile fights in Congress over a trillion-dollar infrastructure package over the term “broker.”

Historically, the Blockchain Association and the Chamber of Digital Commerce have been involved in liaising with authorities which have increased their spending on internal lobbying 60% to $210,000 in Q3 from Q1 and 450% from $30,000 to $136,000, respectively. Crypto exchange Coinbase has also increased its lobbying activities.

With support from Coinbase, Square, and Fidelity, the Crypto Council for Innovation spent $60,000 in lobbying in the third quarter after its rollout in the spring.