Rostin Behram, the chairperson of the Commodity Futures Trading Commission (CFTC), has highlighted the potential risks associated with the debut of Bitcoin ETFs. Behnam issued her warning two weeks after Securities and Exchange Commission approved the first batch. Since then, the group has seen a combined investment of over $5.5 billion. This launched a short-lived but feverish excitement when BTC Price soared past $48,000.
Behnam, the CFTC chairperson, expressed his concern that participants in the market may confuse the approval of a technical investment product like Bitcoin ETF for a regulatory supervision over the commodities digital market. Behnam said that there is currently no regulation in place to govern Bitcoin or the crypto market as a whole, and it’s rife, according to him, with “opaque, inconsistent, and confusing practices.”
The Bitcoin ETF was a major success for the crypto industry. However, its journey from the US to this market has been arduous. Cameron Winklevoss and Tyler Winklevoss filed the first application in 2013, co-founders at crypto exchange Gemini. The SEC rejected their application and subsequent ones over the following decade on the basis that the market was not mature and thus prone to manipulating.
It is now much easier for institutional and retail investors to make bets on Bitcoin, since they can buy shares of a Bitcoin ETF from the SEC-supervised exchange, without having to hold it directly. Behnam reiterated that Congress has not given any federal regulators authority over cash markets of digital assets such as cryptocurrency exchanges. Since fund management companies purchase the asset in the cash market this has a direct impact on the transparency of Bitcoin exchange traded funds.
Behnam stated that “the concerns I’ve publicly expressed for more than six years about the spot digital asset market has only grown.” The need for federal legislation on cash market digital asset has never been greater, and I’ll continue to call for action.
In the US, two financial regulators, SEC and CFTC have been in a tug of war over who is the best agency to oversee the cryptocurrency industry. In a testimony to a Senate Agriculture Committee in 2022, CFTC chair Behnam said that many digital currencies, such as Ethereum and stablecoins should fall under the agency’s jurisdiction. The SEC seems to have a different approach. SEC chair Gary Gensler claimed at several times that almost all crypto assets, excluding Bitcoin, are securities and fall under SEC jurisdiction.
The exact roles of the agencies are still not clear, complicating the regulatory landscape for crypto.