CFTC Chair: Nothing Has Changed to Prevent Another FTX

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Key Takeaways

  • When crypto exchange FTX collapsed, U.S. Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam called for regulation of the industry.
  • In the past year, nothing has been done to prevent another event like the fall of FTX, Behnam said at a conference Wednesday.
  • Behnam urged Congress to pass the Financial Innovation and Technology for the 21st Century Act which would help define who regulates these markets.

There's nothing preventing another FTX-esque disaster in the cryptocurrency market, according to the U.S. Commodity Futures Trading Commission (CFTC) Chairman.

During the annual Financial Markets Quality Conference on Wednesday, Chairman Rostin Behnam said no regulatory changes have been enacted over the past year to prevent another crash like the one caused by FTX. The collapse of crypto exchange FTX happened after the company filed for bankruptcy after being unable to meet customer withdrawal requests.

A disaster of a similar scale was unlikely to occur given the decline in the size of the crypto market since the peak of the bubble, but concerns regarding the potential use of crypto in illicit finance are bringing the issue of legislation back to the forefront, Behnam said.

Crypto regulation in the U.S. has been in a "holding pattern," Behnam said, due in no small part to the uncertainty around which crypto tokens are securities and which are commodities. Regulators feel it's unclear where the CFTC's jurisdiction ends and that of the U.S. Securities and Exchange Commission (SEC) begins.

"This is an inflection point where Congress needs to weigh in and, I think, create a new roadmap," Behnam said.

In terms of legislation that could provide the CFTC with the proper authority it needs to regulate crypto commodities, Behnam pointed to the Financial Innovation and Technology for the 21st Century Act.

"Essentially, it empowers us to regulate, through registration and other basic tools, these cash exchanges," Behnam said.

The bill was introduced in the House of Representatives but has sat in the Committee on Agriculture since the end of July.

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  1. YouTube. "Financial Markets Quality Conference 2023."

  2. Congressional Research Service. "An Overview of H.R. 4763, Financial Innovation and Technology for the 21st

    Century Act."

  3. Congress. "H.R.4763 - Financial Innovation and Technology for the 21st Century Act."

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