US Lawmakers Warn Crypto Regulation Could Be Years-Long Process Despite Increased Funding By Benzinga
Benzinga – Regulatory frameworks concerning digital assets in the U.S. are unlikely to be transformed overnight, even if new bills aimed at facilitating the transition of these assets from securities to commodities are approved by Congress.
During a session with the House Agriculture Committee, Rostin Behnam, the Chair of the Commodity Futures Trading Commission (CFTC), emphasized that the development and implementation of such digital asset rules would be a time-consuming process, The Block reported.
This holds even if the commission received an increase in funding for crypto-specific resources.
“With additional funding, it would take at least a couple of years to implement these rules,” Behnam stated, suggesting the timeframe could extend to “three to four years” without an increase in funding.
The agency’s burgeoning role in overseeing crypto spot markets, beyond its current mandate regulating derivatives of digital assets like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), underscores this point.
Behnam underscored that there is a regulatory void for “digital tokens that are not securities”, a sentiment he has frequently communicated to Congress and various stakeholders over the past year.
He stressed that the CFTC needs expanded authority to regulate digital asset spot markets effectively.
The ranking Democrat on the committee, Rep. David Scott (D-GA), acknowledged the need for enhanced funding for the CFTC, underscoring that they must have the necessary resources to oversee this burgeoning sector effectively.
The Agriculture Committees in both the House and Senate oversee the CFTC due to a majority of commodities futures being crop-related.
The CFTC is pushing for an approximate 10% increase in its annual funding, from $365 million to $411.14 million. While the agency has persistently lobbied for a budget increase, Congress has been moderately responsive. Legislation facilitating the transition of digital assets to commodities status would also expand the CFTC’s regulatory capacity.
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Notably, the pressure to bolster safeguards around digital assets has intensified following the downfall of FTX (CRYPTO: FTT), Celsius (CRYPTO: CEL), Voyager, and Terra-Luna (CRYPTO: LUNA) last year.
This raised concerns among regulators and policymakers about the potential ripple effects on the broader U.S. and global financial sectors should the crypto market continue to expand.
In response, last week, House Agriculture Committee Chair Glenn ‘GT’ Thompson (R-PA) and House Financial Services Committee Chair Patrick McHenry (R-NC) introduced fresh legislation.
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If ratified, the bill would delegate additional authority to the CFTC and instruct both the SEC and CFTC to establish a clearer pathway for digital assets’ transition to commodities.
“We need the power to proactively pursue these individuals,” Behnam stressed, pointing out that digital asset markets could rebound after the post-FTX contraction.
He expressed concerns over possible financial stability risks and broader implications for financial markets if these digital markets start growing once again.
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Photo: Unsplash
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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