CFTC chairman said that cryptocurrencies have not evolved in the ways that the regulators anticipated.
The chairman of the CFTC, Rostin Behnam, said that the evolution of cryptocurrency has progressed in a way that was not anticipated. Behnam made the statement on July 25, while delivering a keynote address of the Brookings Institution webcast on the future of digital assets.
Behnam said that the regulatory approach cryptocurrencies has not been as appropriate as it should be, which has resulted in a recent race to “fill the gap”. He added that each digital asset has been galvanized by the free flow of information available to retail investors, who each project strive to onboard, even though there is no firm regulatory demarcation on ground.
A Part of Mainstream American Portfolio
These are the result of the low entrance investment requirement for these assets and the fact that we are in an information age, says Behnam.
In his words:
“We are here today because digital assets are trending towards becoming a part of mainstream American portfolios, with surveys and polls demonstrating that as many as one in every five adults has invested in or otherwise used cryptocurrency.”
He said that the recent crypto winter has necessitated the call for a technology neutral approach to the regulation of cryptocurrencies. He highlighted that this is coming after a previous crypto winter in 2018, which was accompanies by failures that resulted in hacks, hard forks and failure of institutional support.
He said that the space is facing another storm due to high risk investing, macro-economic factors, contagion and leverage built up by the emergence of new financial products.
A Point of Inflection
The CFTC chair said that the regulators are at a point of inflection because their work is more or less a patchwork since cryptocurrencies do not fall completely under the purview of one agency.
“Instead, the CFTC, other federal agencies, and state regulators are most often collectively compared to a patchwork blanket that is increasingly proving inadequate as temperatures drop and vulnerabilities lay bare.”
