Wednesday, June 19, 2024

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    CFTC Chairman Urges Overhaul of Cryptocurrency Regulations

    CFTC Chairman Rostin Behnam emphasizes the need for updated legislation to keep pace with the evolution of the crypto industry. The CFTC’s enforcement division collected a remarkable $6 billion in fines in fiscal year 2023, with 34% related to digital assets. Behnam’s call for regulatory modernization clashes with SEC Chairman Gensler’s support for retaining Great Depression-era financial laws. The Chairman of the United States Commodity Futures Trading Commission (CFTC), Rostin Behnam, delivered a keynote address at the Financial Industry Association Expo 2023 event in Chicago, highlighting the agency’s significant involvement in the crypto space. Behnam also emphasized the urgent need for updated legislation to accommodate the evolving financial landscape.

    In his remarks, Chairman Behnam revealed that the CFTC’s Division of Enforcement has been engaged in a relentless effort to address misconduct in the crypto sector. Notably, the agency collected a whopping $6 billion in fines during fiscal year 2023. Of particular note, Behnam noted that 45 of these enforcement actions were related to digital assets, accounting for more than 34% of the 131 similar actions initiated by the Commission since 2015.

    One of the notable achievements of the CFTC’s cryptocurrency enforcement efforts was the successful litigation against Ooki DAO, which culminated in the shutdown of the Decentralized Autonomous Organization (DAO) and the imposition of a $643,542 fine. In its default judgment, the US District Court for the Northern District of California recognized DAO as a “person” under the Commodity Exchange Act (CEA) of 1936.

    CFTC on Outdated Laws

    Behnam highlighted the importance of modernizing legislation to address rapid developments in the financial industry, particularly in the areas of DeFi, artificial intelligence and standard WiFi. He expressed concern that the current framework established long ago presents significant obstacles to formulating effective rules and policies to fulfill the agency’s mission.

    The Chairman mentioned that these restrictions force the agency to allocate extensive resources to ensure that its actions are within prescribed limits, which hinders the achievement of its core objectives. As financial markets undergo a process of vertical integration, driven by technological advances and DeFi, regulatory issues are emerging, fueling the need for tailored customer protection measures.

    Behnam’s view on updating regulations for the digital age contrasts with that of Securities and Exchange Commission (SEC) Chairman Gary Gensler, who has expressed support for retaining Great Depression-era financial legislation, arguing that it has benefited investors and economic growth in the past 90 years.

    Behnam indirectly addressed the limits on the CFTC’s enforcement powers, arguing that the agency should not be forced to wait until victims seek help before taking proactive measures. He continued to advocate for the expansion of authority within the crypto space to effectively fulfill the agency’s mission.

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