- CFTC Chairman Rostin Behnam admitted the agency lacks tools to effectively oversee the crypto industry and prevent another crisis like FTX’s collapse.
- The CFTC has limited authority over crypto spot markets and can only address issues like fraud after the fact. It was disappointed Congress did not grant it more power.
- For now, the CFTC remains constrained in its ability to regulate crypto spot exchanges, leaving the door open to fraud and manipulation that can destabilize markets.
The stunning implosion of FTX has underscored the inability of regulators like the Commodity Futures Trading Commission (CFTC) to effectively oversee the cryptocurrency industry. CFTC Chairman Rostin Behnam admitted as much in remarks this week, saying his agency is no better positioned now to avert a crisis than before FTX went under.
Behnam Says CFTC Lacks Tools to Prevent Another FTX
Speaking at an event at Georgetown University, Behnam acknowledged the CFTC has limited authority over cryptocurrency spot markets. While it oversees derivatives like futures, the CFTC can only address issues like fraud and manipulation after the fact.
“Nothing has changed, and we could be in a position where another FTX-type event happens,” Behnam told attendees.
He noted the CFTC had been in discussions with FTX prior to its collapse, given the exchange’s ownership of LedgerX, a CFTC-regulated crypto derivatives exchange. But the agency does not have the power to preemptively monitor or regulate companies like FTX.
Behnam Disappointed Congress Didn’t Grant CFTC More Power
Last year, Behnam urged Congress to pass legislation giving the CFTC authority to regulate cash digital asset markets through registration and other tools. But the bill stalled on Capitol Hill.
While recent crypto legislation does accomplish some of the CFTC’s goals, Behnam said he was disappointed the agency did not receive more oversight powers that could help avoid another FTX-like situation.
For now, the CFTC remains constrained in its ability to regulate cryptocurrency spot exchanges like FTX. That leaves the door open to potential fraud and manipulation that can destabilize markets.