'Nothing has changed' to prevent another FTX collapse, CFTC chair says

Author Courtney Degen

Courtney Degen is a reporter in Washington, covering breaking news on regulatory and legislative developments. Ms. Degen recently graduated with a master’s degree from Northwestern University’s Medill School of Journalism, specializing in politics, policy and foreign affairs. While in the school’s Washington-based program, she covered politics and policy-related issues for a wide variety of publications, including the Wisconsin State Journal, UPI and USA Today. Ms. Degen received her bachelor’s degree from the University of Wisconsin-Madison in 2021, where she studied journalism and political science. As an undergraduate student at the University of Wisconsin-Madison, she also worked as a reporter for Madison Commons, a local news source centered on community issues. Ms. Degen first moved to Washington in January 2020, when she interned for the Department of Justice, Office of Public Affairs. She can be reached at [email protected].

Bob.Allen

Nov 15, 2023

2 weeks ago

"Nothing has changed" to prevent the possibility of another event like the collapse of the former cryptocurrency exchange FTX, Rostin Behnam, chairman of the Commodity Futures Trading Commission, said Wednesday.

"Has anything happened in the last year that would sort of slow down the ability for that kind of fraud to occur again?" Emily Wilkins, Washington correspondent at CNBC, asked at Georgetown University's Financial Markets Quality Conference.

"Ultimately, the answer to that question is no, nothing has changed, and we could be in a position where another FTX-type event happens," Behnam responded.

On the other hand, "That exuberance that existed two or three years ago around digital assets correlated with, obviously, the pandemic [and] folks being home [with] a little extra cash in their pocket," he said. "And those price moves, that high volatility, that excitement — that certainly is gone."

"So, could an FTX-type event happen? I don't want to ever say never," Behnam added.

Behnam has been a longtime advocate for more regulation in digital assets, and he reiterated his position while speaking at Georgetown.

"There is a gap" in the marketplace, he said, as the CFTC does not have jurisdiction over certain digital commodity tokens.

In July, the House Financial Services Committee and House Agriculture Committee advanced a bill that would give the CFTC more jurisdiction over the digital commodity market, which Behnam said accomplishes the goals that he has been "advocating and requesting for a number of years now."

That bill would give the CFTC new authority over digital commodity markets while maintaining the SEC's authority over digital securities. It also directs both regulators to create joint rule-makings on the issue and allows digital asset intermediaries to dually register with the SEC and CFTC.

However, "there's been a pause [in momentum for regulation] because I think there's a bit of skepticism and cynicism about the technology from some," while others are more bullish, Behnam said. "I think that friction is causing a little bit of inertia.

"There's obviously a lot going on in Congress these days … and for those reasons, these bills have been caught, I think, a little bit in a holding pattern."

Author Courtney Degen

Courtney Degen is a reporter in Washington, covering breaking news on regulatory and legislative developments. Ms. Degen recently graduated with a master’s degree from Northwestern University’s Medill School of Journalism, specializing in politics, policy and foreign affairs. While in the school’s Washington-based program, she covered politics and policy-related issues for a wide variety of publications, including the Wisconsin State Journal, UPI and USA Today. Ms. Degen received her bachelor’s degree from the University of Wisconsin-Madison in 2021, where she studied journalism and political science. As an undergraduate student at the University of Wisconsin-Madison, she also worked as a reporter for Madison Commons, a local news source centered on community issues. Ms. Degen first moved to Washington in January 2020, when she interned for the Department of Justice, Office of Public Affairs. She can be reached at [email protected].