In a potentially major turn for crypto regulation in the US, Rostin Behnam, the Chairman of the US Commodity Futures Trading Commission (CFTC), has revealed his resignation, effective January 20, with his exit from the commission scheduled for February 7.
Behnam Resigns, Leaves Key Regulatory Challenges In Crypto
In a statement released Tuesday morning, Behnam reflected on his tenure at the regulatory agency, stating:
Over the past several years, a multitude of domestic and global events tested the resilience of all financial markets. I am proud that the commission consistently made deliberate and intentional decisions to ensure continued strength.
Throughout his time in office, Behnam emerged as a strong advocate for expanding the CFTC’s authority, particularly regarding cryptocurrency regulation. He pushed for legislation that would designate the CFTC as the primary regulator of Bitcoin (BTC) and other digital currencies, aiming to provide oversight of crypto exchanges.
Despite these efforts, significant legislative changes remained elusive during his tenure. However, with Republicans poised to control both Congress and the White House, there is renewed momentum to expand the CFTC’s jurisdiction over major crypto assets like Bitcoin and Ethereum (ETH).
“Folks recognize the crypto market is here. It’s not going to change or go away,” Behnam stated in an interview with Bloomberg News. “And the CFTC is going to be at the center of that new regulatory regime, whatever comes out.”
This sentiment underscores the growing acknowledgment of cryptocurrency’s permanence in the financial landscape and the need for a comprehensive regulatory framework.
Urgent Action From Congress Needed?
Behnam’s leadership has coincided with rapid developments in the financial sector, including the emergence of new asset classes and trading platforms. Behnam remarked in an October interview that the CFTC has been “stretched thin” as it adapts to these changes.
The next chair is expected to face significant challenges, particularly in regulating digital assets and emerging financial products known as event contracts. These contracts allow traders to wager on a variety of outcomes, from political elections to entertainment awards.
Political prediction markets gained visibility during the recent electoral cycle, but their regulatory future remains uncertain due to ongoing court cases and the need for rule-making.
Behnam has expressed concerns about the CFTC taking on the role of an “elections cop,” particularly in his legal battle against Kalshi Inc., an exchange that enables US customers to bet on political outcomes.
As litigation regarding these prediction markets continues, Behnam has advocated for Congress to revisit the CFTC’s statutory framework to clarify what types of event contracts are permissible.
He highlighted that the agency is grappling with a growing array of novel prediction markets, which consume significant staff resources and time.
“You’re going to see that line being blurred between what is legal, what’s illegal, what’s permitted, what’s impermissible,” Behnam cautioned, emphasizing the urgency for regulatory clarity in an evolving market landscape.
Featured image from Forbes, chart from TradingView.com