CFTC committed to regulating crypto tokens not classified as securities

During a conference on February 3, the U.S. Commodity Futures Trading Commission (CFTC) pledged to regulate cryptocurrency tokens that are not considered securities.

At the winter meeting of the ABA Business Law Section Derivatives & Futures Law Committee, CFTC Chairman Rostin Behnam outlined the regulator’s position.

There, Benham said that there is more room for crypto regulation. He said: “There remains a gap in crypto cash market regulation for non-security tokens, and I believe the CFTC is well positioned to fill this specific gap if Congress so chooses.”

In order to do this, Benham stated that the CFTC will participate in the most recent meeting of Congress. Beginning on Friday, the 118th U.S. Congress will convene for two years until February 3, 2025. It keeps the Democratic Senate majority but adds a Republican House majority, which may affect how the CFTC works with politicians.

Benham listed numerous bankruptcies and failures that occurred in 2022 and asserted that regulations are necessary to safeguard consumers and reduce failures.

He continued by outlining the CFTC’s initiatives in the cryptosphere. Benham pointed out that the CFTC’s compliance office has requested proof of regulatory compliance from platforms for crypto derivatives. He also mentioned that the CFTC often meets with registered platforms.

He added that one CFTC division is debating whether to impose trading limitations on staff members of specific platforms that deal in cryptocurrency futures. Benham also referred to certain CFTC cases from the previous year, such as the historic case against OokiDAO and the lawsuits against FTX and Alameda Research.

He pointed out that the CFTC has filed 69 cases involving digital assets to date and that 20% of the regulator’s 82 cases from last year involved digital assets. Because of the CFTC’s “extremely limited jurisdiction,” he deemed these outcomes “excellent.”

Compared to the US Securities and Exchange Commission, the CFTC currently has a smaller involvement in crypto regulation (SEC). Because many cryptocurrency initiatives can be viewed as securities, the SEC dominates the market. In addition to taking action against fraud, the SEC frequently fines cryptocurrency exchanges, lending platforms, and token sales and offerings.

According to developments from the previous year, the CFTC might play a bigger part in crypto regulation. Gary Gensler, the chairman of the SEC, also supported giving the CFTC more authority.

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