Biden’s pick for CFTC chair wants the agency to be a ’beat cop’ with the authority to oversee 60% of digital asset market

Rostin Behnam said it was "critically important to have a primary cop on on the beat" of an emerging market that included cryptocurrencies and stablecoins.

Acting chairperson of the Commodity Futures Trading Commission, or CFTC, Rostin Behnam has likened the government agency’s enforcement of the digital asset space to a beat cop on duty.

At a Wednesday hearing of the United States Senate Committee on Agriculture, Nutrition, and Forestry to assume his position on a permanent basis, Behnam told chairperson Debbie Stabenow the CFTC has been “aggressively pursuing enforcement cases” in the crypto space for some time, including its $100 million case against crypto derivatives exchange BitMEX and the $42.5 million in fines it levied against Tether and Bitfinex. However, he asked that the committee consider expanding the authority of the CFTC, given the emerging digital asset market.

“This is the tip of the iceberg,” said Behnam. “As of yesterday, the total size of the digital asset market was $2.7 trillion. Among that $2.7 trillion, nearly 60% were commodities [...] given the size, the scope and the scale of this emerging market, how it’s interfacing and affecting retail customers, and with the scale of the growth being so rapid, potential financial stability risks in the future, I think it’s critically important to have a primary cop on the beat.”

Behnam also responded to a question from Ohio Senator Sherrod Brown on whether the CFTC would require “additional tools” to handle enforcement in the crypto space, saying the agency, as well as the Securities and Exchange Commission, would likely need “a regulatory structure for both securities and commodities.” Both groups, in addition to the Financial Crimes Enforcement Network, currently handle digital asset regulation in the United States, but with different jurisdictional claims, resulting in a patchwork approach through which companies must navigate to legally operate.

“The markets and the market transactions that are taking place right now are a huge part of the risk that digital assets pose,” added Behnam.

Related: CFTC commissioner says agency has broad enforcement authority on crypto derivatives

Since the departure of Dan Berkovitz earlier this month, there are only two commissioners currently serving at the CFTC out of the normal five: Brian Quintenz in August, and former chair Heath Tarbert in January. Behnam — who has been serving as acting chair at the agency following Tarbert’s departure — is President Joe Biden’s pick to lead the CFTC. In addition, Biden has chosen Kristin Johnson and Christy Goldsmith Romero to fill two of the remaining three seats. Bot must be confirmed by the Democrat-controlled Senate.