CFTC chair Rostin Behnam Expects Crackdown on Cryptocurrency Firms to Continue
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Rostin Behnam, chair of the United States Commodity Futures Trading Commission (CFTC), stated on May 6 that regulators will likely maintain a stringent approach toward cryptocurrency firms as long as the market attracts investors.
Rostin Behnam Sets “6-24 Month Timeline” for Enforcement Cycle
During the 2024 Milken Institute 27th annual Global Conference, Rostin Behnam highlighted an important correlation that enforcement actions will increase with the rising retail investors’ interest and the value of the crypto market.
🚨NEW: CFTC Chairman @CFTCbehnam says in the next 6-24 months we’ll see another cycle of enforcement actions in the #crypto space while there’s no regulatory framework and assets appreciate and retail investors and entrepreneurs have renewed interest. pic.twitter.com/LLZ6ypygHJ
— Eleanor Terrett (@EleanorTerrett) May 6, 2024
The CFTC chair hinted that he believes the next cycle of enforcement actions will begin in a few months time.
“We’re going to probably see in the next 6 to 18 months, or 6 to 24 months, another cycle of enforcement actions because of this cycle of asset appreciation and interest by retail investors. Without a regulatory framework, without transparency, without those tools that we typically use, as regulators, you’re going to continue to see this fraud and manipulation,” he added.
The crypto market has shown resilience despite setbacks in 2022, including market downturns and several company bankruptcies, as it continues to grow and attract investors and entrepreneurs. Hence, why Rostin believes a continuous cryptocurrency crackdown is needed to protect customers.
On digital assets, @CFTCbehnam says:
“There's a sustainability to this asset class. There's obviously been a growth over the past six months… despite what happened in 2022.” https://t.co/5hAqIdAyxB
— Eleanor Terrett (@EleanorTerrett) May 6, 2024
While the CFTC chair did not explicitly state whether the impending wave of enforcement actions against crypto firms would be led by the CFTC or the Securities and Exchange Commission (SEC), both regulators are currently involved in lawsuits against several crypto firms.
It could be recalled that Robinhood, a popular broker-dealer, disclosed on May 6 that the SEC sent a Wells Notice warning, indicating that the company could be charged upon completion of an investigation.
A Wells Notice is a formal communication from the SEC indicating that the commission’s staff intends to recommend enforcement action against a company or individual.
Dan Gallagher, Robinhood’s chief legal, compliance, and corporate affairs officer, expressed disappointment, stating that the firm has invested in years of good faith to work with the SEC for regulatory clarity.
The SEC is now suing Kraken, Coinbase, Uniswap, Metamask and now Robinhood for the crime of helping regular Americans access crypto.
This level of regulatory overreach has destroyed the legitimacy of the SEC and may lose the democrats the election.
Voters don't want this.
— RYAN SΞAN ADAMS – rsa.eth 🦄 (@RyanSAdams) May 6, 2024
Meanwhile, Robinhood’s Wells Notice is one of several filed against crypto entities over the past month. ConsenSys, the crypto firm behind MetaMask Wallet and decentralized crypto exchange Uniswap, have also stated that they received Wells Notices from the SEC last month.
CFTC & SEC on Track to Scale Past 2023 Regulatory Record
Rostin Behnam noted in October 2023 that about one-third of all enforcement actions taken by the CFTC against crypto firms occurred that year.
This statement aligns with a CFTC report in November 2023, highlighting increased digital asset cases, actions to enforce regulatory obligations for registrants, manipulation and spoofing cases, and groundbreaking court decisions in complex legal disputes.
The agency initiated 47 actions in the digital asset commodities sector, including cases against the former CEO of defunct FTX, Sam Bankman-Fried, and former Celsius CEO Alex Mashinsky. Additionally, the Commission was involved in the $4.3 billion settlement between Binance and the US authorities in November 2023, which had a great deal of consequence on Binance.US, its subsidiary company.
Interestingly, a report by Cornerstone Research released in January 2024 revealed that the SEC brought 46 enforcement actions against various digital asset market participants in 2023. This figure represents the highest number since 2013 and a 53% increase from 2022.
Experts believe that both the CFTC chair’s statements and the SEC’s recent Wells Notice against crypto firms indicate that the regulators are on track to surpass the enforcement actions of 2023.