CFTC Chair Rostin Behnam turns his focus to getting ahead of DeFi

Commodity Futures Trading Commission Chair Rostin Behnam honed in on the need to oversee decentralized finance in a speech on Monday, comparing the situation to “unlicensed physicians.”

Behnam’s prepared remarks at the Futures Industry Association Expo in Chicago, come about a month after the agency said it settled charges against DeFi protocols Opyn, ZeroEx, and Deridex over registration violations. 

“To suggest that … we must wait until victims suffer and cry out for help to be proactive and ensure that critical market oversight, robust cybersecurity and system safeguards, and customer protections are in place undermines our mission and purpose,” Behnam said. “If you require an analogy, think about whether you would be comfortable on the road if only some individuals were required to have a drivers’ license, or whether, given the choice, you would entrust your healthcare to an untrained, or unlicensed physician.”

DeFi has come into the spotlight at the derivatives agency over the past month, with some criticizing its enforcement actions against the three DeFi protocols. Coinbase CEO Brian Armstrong urged the three last month to take the cases to court, adding that the agency should “not be creating enforcement actions against decentralized (DeFi) protocols.” 

CFTC’s attention toward DeFi

Meanwhile, the CFTC’s Enforcement Director Ian McGinley has called unregulated DeFi exchanges “an obvious threat.” 

"The existence of unregulated DeFi exchanges is an obvious threat to the markets regulated and customers protected by the CFTC, and it is one we have taken very seriously," the CFTC’s Enforcement Director Ian McGinley said in a speech in September at a conference hosted by the Practising Law Institute.