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CFTC Chair Rostin Behnam Says Another Year of Crypto Enforcement to Come

Published May 7, 2024 4:28 PM
Eddie Mitchell
Published May 7, 2024 4:28 PM
Key Takeaways
  • U.S. regulators rely on lawsuits for enforcement due to a lack of appropriate legislation.
  • The CFTC has repeatedly called for crypto regulations.
  • The U.S. crypto industry continues to grow despite unclear laws.

The Chairman of the U.S. Commodity and Futures Trading Commission (CFTC), Rostin Benham, expects more crypto crackdowns and enforcement actions throughout the year.

This isn’t a prediction or a warning to crypto, it is simply a matter of fact according to Benham, who attributes this forecast to poor policies and legislation guiding the U.S. crypto industry.

CFTC Anticipates Enforcement

Speaking at the Miken Insitute’s 27th annual Global Conference, Benham said  that the crypto market continues to grow, and without appropriate regulations, enforcement actions will likely continue.

“We’re going to probably see in the next 6 to 18 months, or 6 to 24 months, another cycle of enforcement actions because of this cycle of asset appreciation and interest by retail investors,”

The CFTC and SEC ramped up their enforcement efforts following the “bad events” of 2022, which saw the FTX collapse, several major crypto bankruptcies, a market crash, and other events give regulators cause for concern.

Behnam notes that around a third of all CFTC enforcement actions against crypto firms happened in 2023. This was highlighted in a November 2023 statement  from the CFTC, which shows approximately 50% of cases it handled that year were related to, or involved crypto.

U.S. Lacking Crypto Regulations

Though many have described his words as “warnings” to the crypto industry, it’s worth noting that Behnam is critical of U.S. agencies who have failed to establish the necessary regulations, saying:

“Without a regulatory framework, without that transparency, without those tools that we typically use, as regulators, you’re going to continue to see this fraud and manipulation.”

Behnam believes that it is important for crypto firms to be brought into creating the regulatory framework.

Without action from Congress and increases in regulatory transparency, regulators have no choice but to lean on lawsuits to protect consumers.

“Getting legislation done these days is difficult,”

But, he remains hopeful and notes that there is momentum from lawmakers to establish regulations, especially around stablecoins, which he thinks will bring pro-crypto advocates to the table.

Ongoing Lawsuits

Perhaps most demonstrative of the odd state of crypto regulations in the U.S. is the latest action from the Securities and Exchange Commission (SEC), which recently issued a Wells Notice to trading platform Robinhood.

Specifically, the SEC is targeting the crypto unit of Robinhood and alleges securities violations just as it has against Coinbase, Ripple (XRP), and most recently Uniswap (UNI).

Robinhood’s Chief Legal, Compliance, and Corporate Affairs Officer said in a statement :

We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.”

Until the SEC is able to secure a landmark case and set a legal precedent for the classification of cryptocurrencies, we’ll be seeing a lot more of these cases throughout the year.

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