The approach adopted by the US Securities and Exchange Commission (SEC) towards regulating the cryptocurrency industry has raised concerns among both regulatory bodies and the community.
During a testimony before the US House Committee on Agriculture, Rostin Behnam, the Chairman of the Commodity Futures Trading Commission (CFTC), highlighted the lack of federal regulation over the digital commodity market and called for Congress to act to bring it under regulatory oversight. Behnam said that regulating this volatile market would protect customers, ensure market stability, and prevent contagion from affecting the traditional financial system.
“Regulation by Enforcement” Is Not Sustainable
Behnam argued that the recent events over the past year underscored the urgency for these regulations, particularly in light of the bankruptcy of several large digital asset platforms that erased billions of dollars in customer funds and the prevalence of abusive trading activity among large market participants.
He proposed that the market be subjected to similar regulations designed to protect customer assets, monitor trading activity, prevent conflicts of interest, and uphold strict cybersecurity standards.
During the hearing, Behnam and a panel of industry experts faced questions from lawmakers, who emphasized the need for clear policy and greater congressional authority to address digital commodity risks.
Behnam stressed that a regulatory vacuum was creating uncertainty in the digital commodity market and called for more comprehensive regulations to prevent financial instability and provide adequate customer protection.
“Time for Clear Crypto Regulations”
In response to the SEC’s complaint against Coinbase, Brian Armstrong, the CEO of the company, stated that they are proud to represent the industry in court to finally get clarity around the regulations concerning cryptocurrency. Armstrong criticized the SEC’s “regulation by enforcement” approach, which he believes is harmful to America.
He emphasized that there is currently no clear path to register with the SEC, which has resulted in confusion and uncertainty within the industry. Armstrong said that the recent conflicting statements made by the SEC and CFTC over whether an asset is a security or commodity are why new legislation is being introduced.
Despite the ongoing legal issues, Armstrong expressed his faith in Coinbase’s facts and the law and encouraged the industry to continue building. He expressed his belief that America would eventually get it right in the end.
Featured image from iStock, chart from TradingView.com
