CFTC Chairman Talks Crypto Enforcement and the Need for New Legislation

CFTC’s Nonstop Drumbeat on Crypto

At the recent Financial Industry Association Expo 2023 in Chicago, CFTC Chairman Rostin Behnam showcased his agency’s fervent pursuit of regulation in the fast-paced world of cryptocurrency. He described the CFTC Enforcement Division’s efforts as a “nonstop drumbeat,” and let’s just say, it’s one heavy bass line!

Big Bucks in Penalties

In his keynote, Behnam revealed that the CFTC collected a hefty $6 billion in penalties during the fiscal year 2023. And just to spice things up, 45 of these actions related directly to digital assets—this illustrates that the CFTC is not just dipping its toes in the crypto pool, it’s doing cannonballs all the way in!

Ooki DAO: A Precedent-Setting Case

One notable enforcement action was against Ooki DAO, which resulted in its closure and a penalty of $643,542. The U.S. District Court for the Northern District of California ruled that the DAO was indeed a “person” under the Commodity Exchange Act (CEA). Who knew a bunch of lines of code could be called a person? Let’s hope they don’t ask for citizenship next.

The Future of the CFTC Amid Technology

Looking ahead, Behnam underscored the need for modern legislation to match the rapid technological advancements in finance. He pointed out that the CEA’s limitations, rooted in a time before most people even knew what WiFi was, create barriers for necessary rulemakings and policies. It’s like trying to run a marathon in bell-bottom jeans—just doesn’t work!

Customer Protections and Vertical Integration

Behnam also discussed the emerging trend of vertical integration fueled by electronic trading and DeFi, which raises questions about customer protections. It seems “customer protection” has taken on a whole new meaning, akin to getting protected by a sun hat while sunbathing on a beach—seems nice, but are we really safe?

A Call for More Authority in Crypto

In an attempt to draw a contrast with SEC Chair Gary Gensler’s preservationist approach, Behnam argued that the CFTC should not have to wait for victims of misconduct to cry out for help. He advocated for additional authority to proactively address these issues. And who knows? Maybe he’ll get that authority, and we’ll all be saying a little thank you for fewer crypto crises!