United States Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam highlighted his agency’s activity in the cryptosphere and the need for up-to-date legislation at the Financial Industry Association Expo 2023 event in Chicago. He described the CFTC Enforcement Division’s efforts as a “nonstop drumbeat.”
In the text version of his keynote address to the industry group, Behnam recounted the $6 billion his agency collected in penalties in fiscal year 2023. He added:
“45 of those [enforcement] actions this fiscal year involved digital asset-related misconduct, representing over 34% of the 131 such actions brought by the commission since 2015.”
Behnam singled out the “precedent-setting litigation” his agency won against Ooki DAO, which resulted in the closure of the decentralized autonomous organization and netted a $643,542 penalty. In its default judgment against Ooki DAO, the U.S. District Court for the Northern District of California found that the DAO was a “person” under the Commodity Exchange Act (CEA) of 1936.
Behnam returned to the CEA when he discussed the agency’s future direction. “The cornerstone of our latest era is disintermediation brought about by groundbreaking technology: DeFi, AI and standard WiFi,” he said, but:
“The limits in the CEA established in essentially another era create real barriers to engaging in rulemakings and policy that is necessary to our mission, but just beyond our scope.”
Furthermore, those limits force the agency “to engage in increasingly resource-intensive quests for assurances that we are acting within the bounds of our intended remit.”
Vertical integration — an “outgrowth of electronification and the promise of DeFi” — is occurring throughout financial markets and leading to regulatory concerns, and “customer protections mean something different now,” according to Behnam.
Behnam’s statements contrasted sharply with Securities and Exchange Commission Chair Gary Gensler’s position that existing financial legislation “has been quite a benefit to investors and economic growth over the last 90 years” and should not be tampered with.
Behnam also indirectly addressed limitations on the CFTC’s enforcement authority. “To suggest that […] we must wait until victims suffer and cry out for help to be proactive […] undermines our mission and purpose,” he said. “I have continued to advocate for additional authority in the crypto space,” he later added.