Mr Benham also said the divide between the CFTC and its sister regulator, the US Securities and Exchange Commission, stifled regulators’ ability to police digital assets.
The CFTC can only regulate derivatives markets, which include futures, swaps and options trading, while the SEC oversees bonds and stocks.
A grey area exists for cash commodity markets, which can house some cryptocurrencies. Presently, cash commodity markets are less regulated, which means there are lower barriers for entry for untested companies plying their trade in digital currencies.
However, Bitcoin and Ether – two of the better-known digital assets – are classed as cash commodities under US law. Because they comprise tokens that can be listed as futures, this opens the door for the CFTC to impose greater regulatory scrutiny.
In fact, Mr Benham said he had “been calling for Congress to legislate more authority” around cash and digital commodity markets like crypto, but said there was still too many conflicting opinions over the viability of cryptocurrencies.
“This is where having two market regulators is an issue. The SEC has authority over securities, the CFTC only regulates derivatives. One that is unregulated is cash commodity markets,” Mr Benham told the audience at the ISDA/AFMA Derivatives Forum on Tuesday in Sydney.
“What this has created is a gap in the US regulatory system where you have digital commodity tokens being unregulated. That has been an issue.”
Mr Benham said global consumers’ exposure to digital assets posed “a lot of risk,” and the regulatory gap would be his “number one concern” as CFTC chair.
Addressing the OBU
Matthew Russell, the Asia-Pacific head of regulatory affairs at market maker Optiver, told the audience that Australian market-making faced a “crucial period”, as the offshore banking unit regime expires this month.
Implemented in 1992, the OBU provides tax concessions for overseas banks to trade foreign exchange locally.
Mr Russell said the OBU needed to continue to ensure Australia remained “competitive with other jurisdictions in the region”.
“The industry has significantly changed – rapid advancements in technology, products… that are marked by their disentanglement from national borders,” he said. He was hopeful the government and industry could find a solution before the end of this month, but stressed no extension would result in a “hit to revenue”.
“The clock is ticking,” Mr Russell said.
