New US crypto rules could take years, CFTC chair tells Congress

Quick Take

  • New rules for digital assets will take time, Commodity Futures Trading Commission Chair Rostin Behnam said, while repeating a pitch to Congress for new funding. 
  • The rules would be put in place if Congress and President Joe Biden agree on a new law to create a framework around digital assets. 

Even if Congress passes new legislation to create a clearer pathway for digital assets to transition from security to commodity status, don’t expect new U.S. crypto rules to be implemented overnight. 

Commodity Futures Trading Commission Chair Rostin Behnam told the House Agriculture Committee that the new rules around digital assets would take time to implement, even if Congress gives the agency more money for crypto-specific resources. 

“It would take at least one to two years to implement rules,” with additional funding, Behnam said. “I would estimate that this could take three to four years,” without additional funding to match the agency’s potential added responsibility for crypto spot markets; the CFTC currently only has authority to regulate derivatives of digital assets like bitcoin and ether. 

“There is a gap for digital tokens that are not securities,” said Behnam, repeating a message he’s delivered to Congress and anyone else who will listen over the last year: that the CFTC needs more authority to regulate digital asset spot markets. 

“It is very important that we make sure that we provide you with sufficient funding to do this very much needed job,” said Rep. David Scott, D-Ga., the top Democrat on the committee that Behnam testified before. The Agriculture Committees in the House and Senate hold jurisdiction over the CFTC, since the majority of commodities futures are crop-related. 

The CFTC has asked for an approximately 10% increase to its annual funding, from $365 million to $411.14 million, but the agency has long fought for more money with limited receptiveness from Congress. Legislation that would create a pathway for digital assets to become commodities would also give the CFTC more authority than it currently has to regulate them directly.

Crypto failures in focus

Last year’s collapses of FTX, Celsius, Voyager, and Terra-Luna hastened the urgency felt by regulators and policymakers to increase guardrails around digital assets in case the market grew to a size where it could affect the rest of the U.S. and global financial sectors.

To that end, House Agriculture Committee Chair Glenn 'GT' Thompson, R-Pa., and House Financial Services Committee Chair Patrick McHenry, R-N.C., introduced new legislation last week.

If passed into law, the legislation would grant more authority to the CFTC as well as direct the SEC and CFTC to create a more defined pathway for digital assets to become commodities. 

“We need the policing authority to proactively go after these individuals,” said Behnam, emphasizing that digital asset markets could grow again after a post-FTX pullback. “If it starts to peak and move into a direction of growing you could potentially have financial stability risks and other concerns for financial markets."

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