US CFTC’s stance on virtual currencies

Rostin Behnam, chairman of the U.S. CFTC (Commodity Futures Trading Commission), appeared on CNBC’s “Squawk Box” on the 12th and stated, “Under current law, many crypto asset (virtual currency) tokens are classified as commodities. ” he emphasized.

“It is figuring out how existing, decades-old law, fits into this new technology that seems to be changing and ultimately needs a new way of thinking around policy and legislating,” says @CFTCbehnam on #crypto“Under existing law, many of the tokens constitute commodities.” pic.twitter.com/F3JPjWq3wG

— Squawk Box (@SquawkCNBC) December 12, 2023

This is a sign that the company has not changed its view, which is in contrast to the U.S. Securities and Exchange Commission (SEC), which considers many tokens to be “securities.” One of the reasons why regulations regarding virtual currencies are unclear in the United States is said to be this behind-the-scenes jurisdictional dispute between the CFTC and SEC.

Regarding this, Mr. Behnum said, “I have long believed that there are deficiencies in the regulatory regime that Congress is trying to address.”

In the United States, several virtual currency bills are being advanced, but the one that seeks to clarify regulations in particular is the Responsible Financial Innovation Act (RFIA), proposed by Rep. Cynthia Lummis and others. The bill seeks to regulate cryptocurrencies as a commodity and give the CFTC greater oversight powers.

connection:What is the Responsible Financial Innovation Act (RFIA) drafted by bipartisan US lawmakers?

In June, Rep. Patrick McHenry and others also announced a draft bill that would clarify the line between when a virtual currency token is considered a security and when it is considered a commodity.

connection: U.S. House of Representatives members announce bill to clarify virtual currency regulations

Mr. Behnum also denied rumors of a falling out with the SEC, stating that the SEC and CFTC have a positive working relationship and share the same interest in protecting U.S. markets, the financial ecosystem, and consumers. I said.

Furthermore, he pointed out that there are currently three main topics regarding virtual currency regulation: prevention of money laundering and terrorist financing, stable coin regulation, and market structure. Money laundering regulations are attracting the most attention, but Mr. Behnum says he is interested in market structure issues.

A different view from Chairman Gensler

CFTC Chairman Behnum has advocated the need for new virtual currency regulations, and on this point he also takes a different stance from SEC Chairman Gary Gensler.

In October, Mr. Behnam expressed the view that old laws are insufficient to accommodate new technologies such as DeFi (decentralized finance) and AI (artificial intelligence), and called for a clear and realistic regulatory framework to be put in place. He said that the virtual currency market should be properly supervised.

However, Gensler believes that current securities laws are sufficient to deal with cryptocurrencies.

connection: U.S. CFTC chairman urges review of regulations on new technologies including virtual currencies

Vertical integration approved

On the 13th, the CFTC also granted a clearinghouse license to Bitnomial, a Chicago-based crypto derivatives exchange and broker. This is an example of giving permission to a vertically integrated corporate structure.

Vertical integration generally means that a single company performs multiple steps in a business process. Bitnomial is now able to develop the exchange, brokerage, and clearing processes in-house.

“We must apply the rules fairly and equally to all registrants,” Behnum said at the time. This shows the stance that the rules should apply regardless of the technology a company handles.

connection: US CFTC Commissioner proposes pilot program for virtual currency regulation

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