CFTC Chairman Rostin Behnam told Congress that there is an urgent need for legislation that can provide regulatory clarity to the crypto industry to ensure investors are appropriately protected.
Behnam made the statement during his testimony before the House Agriculture Committee on March 6, which focused primarily on the C FTC’s fiscal year 2025 budget request.
Behnam said:
“The idea that crypto will disappear is a false narrative.”
He added that more than 49% of CFTC actions filed during the 12 months ending October 2023 related to conduct involving digital assets, despite the fact that “no federal agency retains direct regulatory authority.” about the crypto industry.
Framework in 12 months
During the hearing, Behnam spoke about the challenges and opportunities presented by digital assets such as Bitcoin (BTC) and Ethereum (ETH), which represent a significant portion of the crypto market’s total capitalization.
He said there is a false perception among regulators and lawmakers that the digital asset market could decline in relevance. However, the past decade has shown that this is far from the case, as demand for these assets has grown exponentially in that time.
Behnam emphasized the need for proactive legislative measures to ensure a stable and transparent regulatory environment. He added that protecting investors should be the government’s top priority given the rising interest in digital assets since the beginning of the year.
Behnam said it would take the CFTC about 12 months to develop a comprehensive regulatory framework for digital assets if Congress passes the Financial Innovation and Technology Act for the 21st Century (FIT Act).
The FIT Act, which advanced through the House Agriculture and Financial Services Committees without reaching a minimum vote, aims to clarify regulatory responsibilities regarding digital assets.
BTC and ETH are commodities
Behnam’s testimony also addressed questions from committee members about the classification of digital currencies as commodities or securities, a distinction that affects legal jurisdiction.
In response to a question from Representative John Duarte, Behnam explained that digital assets are generally considered commodities if they do not meet the criteria to be classified as securities, indicating that a nuanced approach is needed to effectively classify these assets regulate.
Behnam added that Bitcoin and Ethereum did not meet the criteria needed to be classified as securities, which automatically means they fall under the commodities umbrella, despite being incredibly different from physical commodities like gold or corn.
The CFTC chairman told Duarte that there is a huge appetite for Bitcoin among private and institutional investors, regardless of whether the government wants to legitimize it or not.
Behnam admitted that regulators have tried to “fit” crypto into other frameworks, and that the sector should be looked at separately.