CFTC chairman on supporting House crypto bill: It largely fills the gap in regulation

CFTC chairman on supporting House crypto bill: It largely fills the gap in regulation

the house passed a landmark crypto Bill months ahead of the US presidential election that still needs to make its way through the senate for more on the con the current regulatory environment and the markets on crypto we want to bring in commodi future trading commission chairman Russ Benham and um Russ it’s great to see you today good to see you too Becky so we have a lot to talk through why don’t we start with crypto because I think this has been one that has caught so much attention and and looks like it is going to make some progress in Washington too I thought when I first saw this when I first read it that this was a bill you’d be happy about because it looks to me like it gives more power to the cftc in terms of oversight of what happens with crypto this is not a bill you’re recommending why why well I I I haven’t actually taken a position on it for or against um worked with members of Congress on the house side um there are elements of it that certainly impact the cftc there are elements of it that impact the SEC I’ve largely weighed in on the cftc side and as we’ve discussed in the years past and I’ve said publicly this is about filling a gap in regulation and that bill largely accomplishes that goal on the cftc side giving us regulatory powers to register exchanges custodians broker dealers intermediaries and bring some transparency to this particular side of the market that involves commodity tokens themselves so you are in favor of it I’m in I’m supportive of moving forward with legislation to fill the Gap there are some issues that I raised with members of Congress about the bill but as you said it’s just one step Senate still has to take up the bill the the White House has weighed in and says it wants to work with Congress to fill the Gap and further support uh both Innovation which you know sort of outside of my perview but understanding that there’s gaps in regulation and customer protection issues but you’re in favor of the idea that it does give power over the cryptocurrencies themselves to the cftc 100% And I’ve said that all along we have you know as defined by current law we have commodity tokens we have security tokens and what we’ve experienced at the cfdc now for over a decade is this Gap in regulation where we don’t have tools to regulate the market and it’s leaving a pretty significant chunk of the market unregulated so when you look at commodity tokens like Bitcoin and ether you’re talking about 60% of the entire market cap of the crypto uh market and with that in mind I think we have a serious issue in terms of filling that Gap and this is what this legislation sort of achieves what are your problems with the with the legisl there some areas that I’d like to um deal with specifically fun for the the cfdc there’s some issues around institutional investors how we transition from legislation passing to writing the rules and having folks come into compliance so I wouldn’t say anything major per se but there are things that would need to be addressed in that next step is is part of that that you think you should be getting more funding because the knock on it has been that the cftc does not have nearly the oversight structure that the SEC does and taking on crypto and being the full-time cop on the beat for that might require um um more funding for more enforcement to be set up I think that’s a pretty sort of rational uh conclusion you know if they’re going to if Congress is going to give us more Authority or more tools or a bigger mandate we’re going to need more resources this you know is similar with any issue that Congress uh action Congress takes with respect to the executive branch whether it was after the financial crisis and Doc Frank passed these agencies need more money we’re going to need more Personnel we’re going to need more Hardware software we’re going to need more expertise in this space so that we can build up that regulatory that was kind of the knock from critics though that they they chose the cftc because they wanted a lighter touch when it comes well I I take Serious issue with this light touch narrative it’s just false and if you really dig into our regulatory structure and if you talk to any of our registrants I think they’ll say exactly the opposite our enforcement record speaks for itself our regulatory structure is very U specific and prescriptive in Parts um and we’ve been probably the toughest cop on the beat in the crypto space going back to 2014 half of our enforcement docket last year last fiscal year was crypto so the light touch is a little bit of a political narrative I think in Washington this is about filling a gap we have this structure where you have two Market Regulators you have a legal framework that defines tokens as Securities and commodities and as I’ve been saying for years as the financial stability oversight Council has said as well there’s a gap for non-security tokens so I’m just out there making sure that folks understand what the risks are and that we need to feel this yeah what what kind of pressure did you feel from your overlords do you have overlords are you totally independent here’s where I’m I’m going with this I can’t understand sometimes Gary gendler he he taught he knows about crypto he was at MIT he I wouldn’t say he was 180 but he certainly got um it it seemed like he changed a little bit on on what he thought about Bitcoin what he thought about crypto in general and then you look at certain individuals Senator Elizabeth Warren take your pick uh uh on on maybe on either side of the aisle I guess it seems like more on uh on the left are against crypto and it even r i i i dare say some of the the Bad actors it it wasn’t about crypto itself if you had a more open mind about crypto you could have had maybe some regulations or legislations that prevented the Bad actors but because he had this default that all crypto was bad in the first place where did that come from did that come from the administration did you hear similar things no I mean you know look I can’t speak for what others in the administration are saying or thinking but you know you take these jobs you have huge responsibility you have a lens into markets that very few people do right whether it’s traditional derivatives physical Commodities Financial F you agree with gensler’s view you have the same lens do you agree my opinion should not be driven by what I think or what I like or what I dislike it’s what my responsibility is as a regulator and what we observe in markets so again we have this legal framework that defines Commodities a certain way we have these tokens that the way they’re constructed fall within the commodity definition of the existing law and we’ve seen these markets emerge they’ve grown they’ve scaled they’ve gone up and down but we’ve seen sustained interest by retail investors we’ve seen sustained interest by institutional investors and right now unfortunately we’ve s we SE we’ve seen sustained enforcement actions and that’s my problem right my number one responsibility is to protect investors to protect the American economy and when we see continued manipulation and fraud in this market when half of my enforcement docket is crypto in an area that I don’t have traditional regulatory tools that is in my mind a huge red flag and something that I need to speak up and I engage with Congress you say you use the phrase overlords I have authorizing committees in the house and the Senate I have appropriators in the house in the Senate I have to report to them I have to tell them what I’m seeing I have to tell them what I need from a budget perspective and I have to tell them what my recommendation to them is regarding writing law and where the law needs to be changed we all have overlords we all have overs

Commodities Future Trading Commission (CFTC) chairman Rostin Behnam joins ‘Squawk Box’ to discuss the state of the crypto regulatory environment, whether he’s in support on the crypto bill passed in the House, and more.