U.S. CFTC head moves quickly on crypto regulation
Dec 1 (Reuters) - A main U.S. monetary regulator on Thursday urged lawmakers to act quickly to install a regulatory structure for computerized assets following the spectacular collapse of cryptocurrency trade FTX.
In the first of several congressional hearings to look at FTX's failure, members of the Senate Agriculture Board of trustees pressed Rostin Behnam, director of the Item Futures Exchanging Commission, about whether the turmoil could have stayed away from with better oversight.
The CFTC is hamstrung by its powerlessness to register cash market exchanges, Behnam said.
"That concerns me. This is the hole that exists," he told lawmakers. "If we don't follow through with something, customers will continue to lose cash and we will be right back here in a couple of months."
FTX CEO
The regulator also told lawmakers he had met with previous FTX CEO Sam Bankman-Broiled 10 times and traded follow-up calls and messages to discuss the organization's application to straightforwardly clear its customer's trades.
FTX petitioned for financial protection and Bankman-Broiled stepped down as CEO on Nov. 11, days after traders pulled $6 billion from the stage and opponent trade Binance deserted a rescue bargain.
LedgerX, a CFTC-regulated FTX subsidiary that was precluded from the bankruptcy proceedings, has since pulled the plug on its clearing house application.
CFTC's Behnam said LedgerX customer property remains secure and that the organization has the monetary resources to "continue working for the foreseeable future."
He added that the CFTC had no legitimate authority to inspect any of FTX's different entities, and had no visibility into the operations of different subsidiaries.
Behnam has previously asked for greater authority from lawmakers to regulate computerized assets at the organization and continued to urge congressional activity during Thursday's hearing.
The CFTC, which commonly oversees derivatives markets overwhelmed by huge players like cash managers, has the authority to get serious about fraud and misconduct but cannot regulate spot markets.
"The CFTC has many tools at its disposal to attempt to restore defrauded customers, but the process is long and arduous, and sometimes it is impossible to return what was all lost," Behnam said.
Regulators are also squabbling over who should assume a sense of ownership with overseeing the crypto market. Numerous Senate Agriculture Panel members have previously concurred with Behnam that the CFTC should take on a bigger job.
But the U.S. Securities and Trade Commission has more expertise in overseeing markets in which individual investors are involved. SEC Seat Gary Gensler has said he expects his organization to be the essential regulator because he considers most crypto tokens to be securities.
Sen. Debbie Stabenow, the Vote base seat of the Senate Agriculture Council, and Sen. John Boozman, the panel's top Republican, introduced legislation in August that would make a regulatory system for computerized commodities.
Behnam suggested that lawmakers "take a pause" and reevaluate the bill considering the FTX bankruptcy, and possibly consider bolstering provisions around disclosures of monetary data and conflicts of interest.
FTX's defeat will be inspected in several additional congressional hearings this month, with the House Monetary Services Panel launching a series of hearings on Dec. 13.
The advisory group has said it expects to hear from Bankman-Seared, FTX, and it is partnered exchanging firm Alameda Research, as well as Binance.
