CFTC chair Rostin Behnam appeared before a Senate Agriculture Committee to talk about how FTX happened and how it could have been prevented.

United States Commodity Futures Trading Commission chair Rostin Behnam told a Senate Agriculture, Nutrition, and Forestry Committee meeting Dec. 1 that his agency’s regulations contain “core elements that have served the markets for decades.” But as the fallout from the FTX collapse gets sorted out, notable gaps in current legislation have come to light, Behnam and the senators agreed.

Sen. Tina Smith called the FTX collapse “shocking, not surprising,” and said that future crises will continue to occur as long as regulatory gaps remain. Behnam pointed out that the Securities and Exchange Commission has the authority to require basic safeguards be in place, such as separation of house and customer money and best execution of investment trades.

“We know how to do this,” Behnam said. Nonetheless, he had stated in his opening remarks:

Invariably, the questions we are all obligated to answer as regulators are: ‘How did you let this happen?’ and ‘How will you prevent this from happening again?’ […] Without new authority for the CFTC, there will remain gaps in a federal regulatory framework, even if other regulators act within their existing authority.

Behnam has lobbied for greater authority for his agency for months. He alluded to alleged conflicts between the CFTC and SEC when he dismissed talk of a “power grab.” Interagency cooperation is not new and will continue, Behnam said. Extending CFTC authority is “about filling a gap.”

“I think the responsibilities would be the same,” between the SEC and CFTC with comprehensive regulation, and CFTC regulation works well when it is applicable.

Behnam pointed to crypto derivatives and clearing platform and FTX subsidiary LedgerX as an example of successful CFTC regulation. But, “We at the CFTC do not have the legal authority to ask about an unregulated entity,” without a whistleblower, Behnam told Sen. Tommy Tuberville. In addition, Behnam told him:

We simply do not have the authority to register cash market exchanges […] This is the gap.

Tuberville also pointed out that FTX had high governance marks from ratings agencies. Can they be sued, Tuberville asked. Oversight of ratings agencies is another “potential gap,” Behnam replied.

Sen. Kristen Gillibrand, co-author of the Responsible Financial Innovation Act with Sen. Cynthia Lummis, told Behnam that there were “a couple of areas where I still see risk coming ahead.” Mergers and acquisitions were one such area. The CFTC paperwork to initiate the FTX acquisition of LedgerX amounted to “a notice filing” at best, Behnam conceded.

There is also a question of the impact of overseas companies on the United States and U.S entities trading offshore, Gillibrand added.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Will Fed’s hawkish tone drive altcoin gains off a cliff?

Will Fed’s hawkish tone drive altcoin gains off a cliff?

Optimism (OP), MAGIC (MAGIC) and Stargate Finance (STG) are the top gainers in the last 24 hours. The rally of these altcoins can be attributed to the volatility generated by the interest rate decision and the Fed’s policy meeting that took place on Wednesday. 

More Crypto News

Fed remains hawkish with 25 bps hike, how will Bitcoin price react?

Fed remains hawkish with 25 bps hike, how will Bitcoin price react?

Bitcoin price plunged to its weekly low of $22,862 earlier today, as traders awaited the US Federal Reserve’s rate hike decision. BTC has traded sideways in the 24-hours preceding the rate hike announcement.

More Bitcoin News

Cardano price is looking to reclaim this level to mark a 17% rally and recover 4-month-old losses

Cardano price is looking to reclaim this level to mark a 17% rally and recover 4-month-old losses

Cardano price has been treading steadily upward, recovering the losses it endured over the last few months. The uptrend with ADA potentially heading toward $0.45 might differ.

More Cardano News

ApeCoin Price Prediction: Has the downtrend already started?

ApeCoin Price Prediction: Has the downtrend already started?

ApeCoin price shows subtle cues to suggest that a downtrend move could occur. The possibility of a liquidation event should not be ruled out moving forward.

More ApeCoin News

Bitcoin: If bulls are back, this is where you can accumulate BTC next

Bitcoin: If bulls are back, this is where you can accumulate BTC next

Bitcoin price shows a lack of momentum after an explosive move in the last three weeks. The fourth week has been relatively silent, without a lot of volatile moves. While BTC consolidates, other altcoins are rallying left and right, providing massive gains.

Read full analysis

BTC

ETH

XRP