In an address delivered at the Financial Industry Association Expo, CFTC Chairman Rostin Behnam shed light on the agency’s active role in the world of cryptocurrencies and emphasized the pressing need for modernizing legislation. Speaking at the 2023 event held in Chicago, Chairman Behnam provided insights into the tireless efforts of the CFTC Enforcement Division, describing it as a relentless force in the field.
During his keynote presentation to industry professionals, Behnam highlighted the staggering $6 billion collected by the agency in penalties for the fiscal year 2023. He went on to reveal a noteworthy statistic: “This fiscal year, 45 of our enforcement actions were related to digital assets, constituting more than 34% of the 131 such actions initiated by the commission since 2015.”
Of particular significance was Behnam’s mention of a groundbreaking legal victory against Ooki DAO, a decentralized autonomous organization. This victory resulted in the shutdown of Ooki DAO and the imposition of a hefty $643,542 penalty. The U.S. District Court for the Northern District of California, in its default judgment against Ooki DAO, determined that the DAO qualified as a “person” under the Commodity Exchange Act (CEA) of 1936.
Chairman Behnam then turned his attention to the CEA while discussing the future direction of the agency. He remarked, “Our current era is defined by disintermediation, driven by revolutionary technologies such as DeFi, AI, and ubiquitous WiFi.” However, he also acknowledged a significant challenge, stating, “The constraints within the CEA, originally established in a vastly different era, present formidable obstacles to our ability to enact regulations and policies essential to our mission but currently beyond our jurisdiction.”
Moreover, these constraints compel the agency to embark on increasingly resource-intensive efforts to ensure that its actions align with its intended scope. Behnam drew attention to the phenomenon of vertical integration, which has emerged as a natural consequence of electronification and the promise of DeFi, and he expressed growing regulatory concerns. He concluded, “The concept of customer protections has evolved significantly, given the changing landscape.”
Behnam’s statements stood in stark contrast to the perspective of Securities and Exchange Commission Chair Gary Gensler, who firmly asserted that existing financial legislation has been a substantial boon to investors and economic growth over the past nine decades and should remain untouched.
Behnam also indirectly addressed the limitations on the CFTC’s enforcement authority. He stated, “To suggest that we must wait for victims to suffer and plead for assistance before taking proactive measures undermines our mission and purpose.” He concluded with a resolute call for expanded authority in the realm of cryptocurrencies.