CFTC chair says agency is ‘handcuffed’ as crypto regulations stall: Report

Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam reportedly said the agency was “handcuffed” as crypto regulation talks have reached a standstill in the United States. 

Efforts to adopt a legislative framework regulating the digital asset industry have “stalled out so far,” Behnam said at the Securities Industry and Financial Markets Association (SIFMA) annual meeting in New York on Oct. 21.

Still, he remained confident that a new Congress and president could make progress. “I’m not betting on anything happening necessarily at the end of the year, but there’s a unique appetite that this election, I think, has changed around digital assets and technology,” he said, according to Law360. 

He added that without any legislation, the agency is “really handcuffed” in “policing” the crypto market, which would leave investors “vulnerable.” 

“That ends up leaving a really vulnerable market, leaving vulnerable customers, leaving institutional money on the sidelines and ultimately not really helping support technology as it wants to integrate into traditional finance.” 

SIFMA President Kenneth Bentsen said there was “growing frustration” in the finance industry as brokerage firms questioned whether it was possible to operate or achieve success by avoiding an enforcement action or if it was “just going to be a constant liability for firms.”

CFTC taps into artificial intelligence

Rostin Behnam also revealed that the CFTC used AI to police the markets. 

“We are using artificial intelligence, different types of analytics, to comb through the data we collect,” he said.

He added that the agency had a huge opportunity to go beyond data analysis and use emerging technologies such as AI to detect market manipulation and cyberattacks and reduce the number of lawsuits.

Related: Bill seeks to create SEC-CFTC joint committee on digital assets

“If we can start to use AI collectively to ensure compliance, I think there’s probably going to be a lot fewer enforcement cases,” he said. 

On Oct. 17, the Treasury revealed that it had been using machine learning AI to sift through data and recover $4 billion in fraud and improper payments in fiscal 2024. 

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