The Chairman of the Commodities Futures Trading Commission (CFTC), Rostin Behnam, says that cryptocurrencies have significant retail participation. Behnam made the statement during a U.S. Senate Committee on Agriculture, Nutrition, and Forestry hearing on September 15. According to a Twitter post shared by the Chairman, the CFTC announced on its official Twitter account:
“Chairman Rostin Behnam is testifying before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry at a legislative hearing to review S.4760, the Digital Commodities Consumer Protection Act”
High Leverages And Dependence On Unregulated Platforms
HAPPENING NOW: Chairman Rostin Behnam is testifying before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry at a legislative hearing to review S.4760, the Digital Commodities Consumer Protection Act. Read his remarks as prepared: https://t.co/yG34eB0FCF
— CFTC (@CFTC) September 15, 2022
During the hearing, the Chairman said that cryptocurrency investment at the moment has a large retail participation in its speculative market. Behnam added that another feature of the market is the use of high leverage and dependence on platforms that are outside the regulatory purview of the regulators of the banking sector.
Behnam said that the reality of the crypto market is quite different from that of other financial markets even though most of the investors are not aware of this fact.
Operating in The Shadows
He highlighted that more than $1 trillion has been lost in the space on account of the absence of a comprehensive regulation which has seen many entities operating “in the shadows”. He added that low income earners are usually hard hit by the failures of the digital assets market.
“One lesson from the recent fallout is that leverage, interconnected markets, and contagion can wreak the same havoc in the digital-asset ecosystem that they do in our traditional financial markets, particularly in the absence of appropriate regulation.”
Many Cryptocurrencies fall Under CFTC Purview
Behnam emphasized his belief that many digital currencies constitute commodities and therefore fall under the purview of the CFTC.
Speaking on the operation of the agency, the chairman said the agency uses a disclosure regime to ensure customer protection. This enhances transparency, security of transaction and the integrity of the market.
“These structures inform customers about who they are dealing with and provide clarity on the risks of participating in our markets.”
He further mentioned that the CFTC requires digital commodity brokers, dealers, and custodians to be members of registered futures association.
The chairman said that:
“The DCCPA acknowledges the key role that self-regulatory organizations, like the National Futures Association (NFA), our designated registered futures association, play in safeguarding the integrity of markets through strict requirements and oversight.”
He added that
Going a step further, the CFTC’s Reparations Program provides a prompt, accessible, and effective forum for retail participants to resolve disputes with registered trading professionals. Decisions rendered by an Administrative Judge are enforceable and may be reviewed by the Commission and ultimately a federal appeals court.”