A hearing of the Senate Agriculture Committee on December 1, 2022 called on Congress to act swiftly to pass CFTC laws to prevent further loss of funds in the wake of the FTX collapse.
The committee questioned Rostin Behnum, head of the Commodities and Futures Trading Commission (CFTC), to clarify why FTX was exposed rapidly. They also discussed how to protect US customer funds going forward.
CFTC bill allows for sharing of regulatory responsibility
The committee deplored the lack of risk management in FTX and called for faster regulation to ensure that such collapses do not recur.
Committee chair Senator Debbie Stabenow (D-MI) said she hopes the Digital Commodities Consumer Protection Act of 2022 will serve the purpose of greater regulation of the crypto industry under the authority of the CFTC. Stabenow co-drafted the bill in August 2022 with Sen. John Boozman (R-Ark.).
Crucially, she added that the CFTC will not be the only agency to regulate crypto.
“I’ve said this before, and I’ll say it again, the Digital Commodities Consumer Protection Act does not take away authority from other financial regulators, nor does it make the CFTC the primary crypto regulator, as crypto assets can be held in many different ways. used,” he insisted.
The clarification comes after Gary Gensler, chairman of the Securities and Exchange Commission, raised the issue of the bill. He argued that a CFTC-focused bill would not do enough to protect investors.
The Senate Agriculture Committee oversees the CFTC, which regulates the US derivatives and commodities markets.
On November 11, 2022, FTX and several affiliated entities filed for Chapter 11 bankruptcy. Following the filing, FTX failed to honor nearly $5 billion in customer withdrawals five days ago.
CFTC commissioner says agency should be empowered
According to Benham, FTX previously engaged with the CFTC to register US-based derivatives exchange and clearinghouse, LedgerX. He said the company’s operations remain solvent for the foreseeable future. Furthermore, he argued that the CFTC was instrumental in ensuring that LedgerX survived the bankruptcy of 130 entities with links to the FTX.
“The lesson here is clear, thoughtful and comprehensive regulation that works to protect clients and prevent incidents from happening at other FTX entities,” Behnam said.
President Joe Biden is sworn in as the fifteenth CFTC commissioner on January 4, 2022, in Behnam.
The commissioner urged Congress to arm the Commodities and Futures Trading Commission with the authority to regulate the cryptocurrency industry.
“We at the CFTC lack the authority to comprehensively regulate the digital asset market, and to prevent this from happening again, we must be granted appropriate authority from Congress.”
Behnam dismissed the notion that the CFTC was a light touch regulator compared to other federal agencies. He told that the agency had imposed a fine of two and a half billion dollars in 2022.
While many industry players have pointed to a lack of regulatory clarity as the reason for FTX’s downfall, crypto skeptic and former SEC official John Reed Stark says that there is a need for regulatory clarity for the crypto industry to gain approval. Nothing more than a thinly-disguised gambler. risky guess.
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