CFTC Chairman Foresees Heightened Regulation for Crypto Firms Amid Growing Investor Interest
Summary:
CFTC Chairman Rostin Behnam predicts increased regulation for cryptocurrency firms, attributing this to the market's continued appeal to investors. This prediction follows the supposed market downturn in 2022 due to various unfavorable incidents. While it is still unclear whether the CFTC or the SEC will lead the enforcement actions, it is known that both are currently involved in numerous lawsuits against crypto firms. The number of crypto-related enforcement actions launched by the SEC in 2023 was the highest since 2013, and relevant cases could further increase as U.S. lawmakers propose to legislate cryptocurrency firms within existing regulatory protocols.
U.S. Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam anticipates that American regulators will maintain strict oversight of cryptocurrency companies given the sector's sustained appeal to investors. During his speech at the 2024 Global Conference on May 6, Behnam highlighted that, notwithstanding the damaging incidents throughout 2022 leading to a market slump and multiple firms going under, the crypto market continues to expand and magnetize investors and business innovators. He refrained from indicating whether the CFTC or the Securities and Exchange Commission (SEC) would spearhead investor protection measures but noted both bodies are currently engaged in legal suits against numerous cryptocurrency firms.
"In the upcoming 6 to 24 months, we can expect yet another phase of enforcement actions precipitated by this cycle of asset value increase and intensified retail investor engagement," the CFTC chief stated. "In the absence of a regulatory structure and adequate transparency, as well as the typical tools used by regulators, fraudulent and manipulative activities will be persistent."
In a panel discussion, Behnam concurred with a moderator that the optimal progression would entail U.S. legislators incorporating cryptocurrency companies into existing regulatory protocols. Congressional representatives are on standby for a legislative vote that could define the SEC’s and CFTC's specific authority over digital assets, a bill that was approved at the committee level in July 2023.
A report published in January by Cornerstone Research revealed that 2023 witnessed the highest number of crypto-related enforcement actions instigated by the SEC since 2013. Pending cases include those against prominent U.S. cryptocurrency companies such as Kraken, Binance, and Coinbase. On May 4, Robinhood Crypto was served a Wells notice, typically a sign of impending enforcement action.
In October, Behnam reported that around a third of all the CFTC’s enforcement actions against cryptocurrency companies were executed in 2023. As of November, the CFTC confirmed initiating 47 proceedings in the digital asset commodities sector with cases involving ex-FTX CEO Sam Bankman-Fried and former Celsius CEO Alex Mashinsky, and was part of the $4.3 billion settlement reached between Binance and U.S. authorities in November.
U.S. enforcement bodies are reportedly ramping up their efforts to squash cryptocurrency-related criminal activities.
Published At
5/6/2024 11:59:50 PM
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