The U.S. Commodity Futures Trading Commission (CFTC), an independent federal regulatory agency created by Congress, has called for federal legislation to regulate cryptocurrency, considering the public's growing optimism for digital assets and the apparent surge in the value of Bitcoin and other cryptocurrencies.
CFTC Chair Rostin Behnam told the U.S. House Committee on Agriculture Wednesday that new market structures also require fresh legislation, "especially" in terms of protecting consumers from financial crimes such as fraud and money laundering, as per the agency release of Behnam's testimony.
"Nowhere have we been more active than in the digital asset space," Behnam said, adding that in fiscal year 2023, the agency brought a total of 47 actions "involving conduct related to digital commodities." The said number accounts for over 49% of the CFTC's actions filed during the period. Behnam said it was a "staggering statistic, given the fact that no federal agency retains any direct regulatory authority over the underlying (or cash) digital commodity asset market."
He further said that the public's enthusiasm for digital assets continues to rise, which then necessitates legislative action, so the American financial system can be protected and cryptocurrency markets are appropriately regulated.
"When the use of digital assets and related enabling technologies for illicit financial purposes threatens national security and may fund acts of war and terrorism, our laws must continue to aggressively demand" that all entrants into such markets comply accordingly with key protective regulations, he added.
The CFTC urges digital asset entrants to implement and comply with the following measures: know your customer (KYC) procedures, anti-money laundering (AML) systems, and customer information programs (CIPs).
Behnam also emphasized the need for legislation to implement strong derivatives regulations to keep the American derivatives market safe, effective, strong, "and the most desirable in the world."
This is not the first time Behnam called for legislative action on crypto regulation. In January, he flagged the Securities and Exchange Commission's (SEC) approval of spot Bitcoin exchange-traded funds (ETFs). He said the move could introduce risks to the financial market.
"The need for federal legislation over cash market digital assets has never been more critical, and I will continue my call for action," Behnam said at the time.
The regulator has also taken steps to rein in companies that it said were operating illegally. It sued Binance, the world's largest cryptocurrency exchange by trading volume, earlier last year, saying the exchange was "illegal" and had a "sham" compliance program.
