Why New Crypto Regulations Are Needed in the US
Shortage of Regulation Restricts Crypto Market
The lack of clear regulations for crypto in the US has been a longstanding issue, restricting market growth and endangering customer safety. The Commodity Futures Trading Commission (CFTC) is one of the two major US financial regulators, alongside the Securities and Exchange Commission (SEC). The SEC recently sued two of the largest crypto exchanges, highlighting the need for clearer regulation. However, CFTC Chairman Rostin Behnam warns that making new rules for crypto in the US could take years.
Concerns Raised by Rostin Behnam
Behnam spoke about the issue before the US Committee on Agriculture and expressed his concern about the lack of regulation in the crypto industry. He stated that he has been advocating for better rules for years, but the process is far slower than desired. Behnam believes that the volatile market should be taken ‘out of the shadows’ and clear regulations should be in place to guarantee customer safety. The accessibility and transparency of investments in digital currencies are substandard in some areas, which can discourage potential investors.
The Financial Stability Oversight Council (FSOC) has published a report on the risks of financial instability in the digital market. One of the most important pieces of advice is that the US Congress take action to close the legislative loophole for crypto and fill effects. Behnam says there are many risks of allowing American citizens to invest millions in unregulated digital assets.
Digital Regulatory Requirements
Behnam asserts that new regulations are necessary and fast. To achieve this, he argues for additional powers for the CFTC, which he believes can be acquired without violating current law. Behnam believes the CFTC can do a lot to address the current loopholes surrounding cybersecurity, crypto mining, and other activities. He also asserts that if one crypto exchange fails, the new regulations should ensure that the relevant customers do not suffer. Further, Behnam highlights that the CFTC has been proactive in protecting investors in the digital marketplace, with more than $4 billion in fines and damages awarded in a total of 85 cases.
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Call for Additional Funding and Powers
Behnam suggests that the activities of the CFTC are limited to solving crimes committed rather than prevention. Therefore, he requests that additional funding and powers be allocated to the CFTC to expand its capabilities and protect investors. Investing in unregulated digital assets poses a risk not only to the investors but also to overall financial stability.
The lack of clear regulatory requirements for crypto in the US poses a risk to investors and the financial market. Rostin Behnam, chairman of the CFTC, highlights the urgency of addressing the issue and ensuring that the relevant authorities are granted additional funding and powers to protect the interests of investors. Clear regulations for the crypto market are essential to achieving customer safety, enhancing transparency and accessibility, and driving growth in the industry.