CFTC Chairman Rostin Behnam said the agency is capable of taking on additional crypto responsibilities during a hearing before the Senate Appropriations Committee on June 13.
Behnam denied suggestions that the CFTC would “bite off more than it can chew” if it were given additional crypto authority.
He asserted that crypto commodities fall under the agency’s responsibilities and described a regulatory gap that could be filled.
Behnam said the CFTC is “adequately equipped” to oversee the markets as it traditionally does, but would need additional funding if it were to gain authority over the crypto markets.
Behnam also accepted the suggestion that existing KYC/AML laws could be applied. He said:
“I don’t think we should deviate too far from existing law.”
CFTC has limited authority
The CFTC’s authority over cryptocurrencies and non-traditional assets is currently limited to fraud and manipulation. In a prepared statement, Behnam said the CFTC can only address issues it becomes aware of through surveillance and monitoring or through tips and complaints.
Behnam highlighted that the CFTC filed 47 crypto cases during fiscal year 2023, representing nearly half of the agency’s cases. He said:
“Because many agency resources, not included in our budget, are allocated to an unregulated market, I fear the current trajectory is unsustainable.”
He warned of “rampant fraud and manipulation” if the trend continues.
During the hearing, Behnam added that the company has conducted 135 crypto cases over the past decade and made billions of dollars despite its lack of direct authority or jurisdiction.
Gensler calls for conditional CFTC powers
SEC Chairman Gary Gensler, who also testified at the hearing, said the CFTC’s ability to take on additional crypto responsibilities is “dependent” on the exact duties assigned.
Gensler claimed that up to 20,000 crypto tokens exist, adding that the CFTC lacks the SEC’s existing disclosure model for the securities market, which covers most cryptocurrencies.
Gensler said:
“It’s this disclosure-based regime that we have at the SEC… the crypto field has turned its nose up at it and been non-compliant.”
Gensler responded to the question of whether the agencies have equal authority. He said the SEC has about nine times the staff and a “bigger job” than the CFTC.
Budget
The Senate hearing focused largely on the presidential budget request, which would grant the SEC a $2.6 billion budget and the CFTC a $399 million budget for fiscal year 2025.
The increased budget will allow both agencies to expand or maintain the scope of their existing duties, including through personnel and other costs.
Separately from the budget, Congress could grant the agencies new powers through the Financial Innovation and Technology for the 21st Century Act (FIT21). The bill outlines the roles of SEC and CFTC. FIT21 has passed the House of Representatives, but there is no guarantee it will pass the Senate and become law.
The Lummis-Gillibrand Responsible Financial Innovation Act also aims to expand the scope of the CFTC, but no progress has been made since its reintroduction in 2023.