Don't expect the CFTC to be 'light touch' if it gains crypto oversight power, says Benham

The chair of the Commodity Futures Trading Commission pushed back against those who consider it a less robust regulator than the Securities and Exchange Commission.

“Those who describe us as light touch just don’t know the CFTC,” Chair Behnam said Friday at the Financial Markets Quality Conference hosted by Georgetown University's McDonough School of Business.

Behnam responded to a question describing the perception of a regulatory "light touch," which came in the context of the CFTC chair's push to expand his agency's authority over crypto spot markets and other intermediaries. 

Despite not currently holding direct authority over digital asset cash markets, the CFTC has brought over 60 enforcement cases against cryptocurrency-related projects, which Behnam cited as the reason he wants more direct authority.

"Every single one of those enforcement actions has been driven by customer complaints or whistleblowers or tips that we have received," said Behnam. "None of it is driven by surveillance tools or market oversight tools that we retain in traditionally regulated markets." 

Passage of legislation, introduced by Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., and supported by the committee's top Republican, Sen. John Boozman, R-Ark., would allow for more direct market oversight, Behnam said. 

"So what I've called for is cash market authority in the digital asset, commodity space, and that would provide us legislative authority over cash markets. These would be the trading platforms, the intermediaries or the broker-dealer," said the CFTC chair. "The custodians, potentially the data repositories, and those core infrastructure and components of markets." 

The other major regulator in question is the Securities and Exchange Commission, whose leader Gary Gensler suggested support for expanding the CFTC's authority into spot markets earlier at the same conference.

Gensler was also among the regulators who voted to recommend legislation to grant U.S. officials more authority over digital commodity markets in a report issued by the Financial Stability Oversight Council last week. 

Behnam acknowledged the CFTC would need more resources to accomplish the hypothetical expanded mission. The Stabenow-Boozman bill includes a user fee mechanism that would bring in more money to the CFTC, which often sees less funding from Congress than it requests. According to Behnam, that would pay for an expansion into the market oversight tools that the agency could use. 

“We need to modernize our data infrastructure,” including AI and machine learning for markets surveillance and enforcement, said Benham.