CFTC prepares to oversee crypto, Behnam tells senators

In the Senate’s latest foray into crafting cryptocurrency regulation, two committee hearings on Thursday demonstrated that the jurisdiction’s industry guidelines remain up in the air.

The Senate Agriculture Committee heard from Commodity and Futures Trading Commission (CFTC) Chairman Rostin Behnam and other professionals in the cryptocurrency and banking industry – while SEC Chairman Gary Gensler appeared before the Senate Banking Committee.

Behnam told the senators that the CFTC has already begun preparing to become the crypto industry’s watchdog.

“The volatility in the market, and its impact on retail customers — which can only worsen under current macroeconomic conditions — underscores the urgent need for regulatory clarity and market protection,” Behnam said in prepared remarks to the Agriculture Committee.

Appearing before the Banking Committee at the same time, Gensler doubled down on his view that most crypto tokens and companies will have to work with his agency in some capacity.

“Of the nearly 10,000 tokens in the crypto market, I believe the vast majority are securities. The offering and sale of these thousands of crypto security tokens are covered by the securities laws, which require these transactions to be registered or made pursuant to an available exemption,” Gensler said in prepared remarks “Therefore, I have asked the SEC staff to work directly with founders to get their tokens registered and regulated, where appropriate, as securities.”

The message was in line with comments Gensler made ahead of the hearing. The SEC chief said earlier this month that he would support the CFTC overseeing cryptos that can be classified as commodities, namely bitcoin.

The Agriculture Committee’s chairman, Sen. Debbie Stabenow, D-Mich., and committee member Sen. John Boozman, R-Ark., introduced legislation in August — the Digital Commodities Consumer Protection Act — that would place commodities under the CFTC’s jurisdiction. The bill only mentions bitcoin and ether as commodities and does not elaborate on the classification process.

“We are at a crossroads when it comes to crypto,” said Christine Parker, vice president and executive vice president of Coinbase, during the second panel before the Agriculture Committee.

Parker emphasized the need for clearer definitions and classifications, adding that digital assets should be regulated by the CFTC and not through enforcement actions by the SEC. This appeared to be a nod to Coinbase’s recent battle with the SEC over the classification of nine tokens as securities.

Despite ongoing disputes over jurisdiction, the agencies maintain that they are committed to working together and share the same goals.

“The two agencies are working very closely together,” said Valerie Szczepanik, director of the Office of the Strategic Hub for Innovation and Financial Technology (FinHub) at the SEC, during a panel discussion at the Digital Asset Summit in New York on Tuesday. “From my perspective, the agencies really want to get it right. It’s all about investor protection and market integrity, and our two agencies want to cover the landscape so that those goals are met.”

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