The cryptocurrency industry is currently facing tightened scrutiny and harsh regulations in many countries, including the US. Many financial regulators, experts, policymakers, and agencies constantly argue about how the crypto market should be regulated.
According to news reports, the Chairman of the Commodity Futures Trading Commission, Rostin Behnam, expressed his thoughts on crypto regulations recently. He spoke on many crypto-related topics ranging from what constitutes a commodity or a security to market structure and other commodity-oriented questions.
According to Behnam, one of the primary quests regulators struggle to execute is determining whether crypto assets are commodities or securities. Figuring out his task would significantly impact how cryptocurrency is regulated and how much oversight it needs.
The chairman admitted that the question was not easy to answer. He added that CFTC is diligently working hand in hand with other regulators to create a compact regulatory framework for crypto.
US Seek To Protect Its Citizens In The Crypto Space
Furthermore, Chairman Rostin Behnam emphasized the need to protect United States investors in the crypto space. He added that due to crypto’s decentralized nature, it is right to say digital assets are beyond regulations. However, he claimed that is not the right approach.
According to the CFTC chair, the focus should be shifted from the nature of crypto to what products it offers and expose the US investors to. In addition, he said the people or entities behind each crypto platform’s product should be duly noted.
Behnam pointed out that the United States’ existing laws somewhat cover majorities of cryptocurrencies. He added that the regulatory approach the CFTC takes is mainly based on legal precedents.
Chairman Behnam explained that by proper analysis of the legal precedent, the regulator is able to apply existing US rules to regulate the crypto space. By doing so, they can protect the interest and funds of the US investors.
To ensure the long-term viability of the cryptocurrency industry, the regulatory procedure is a necessity, according to Behnam. He added that by subjecting virtual assets to proper regulation and management, the regulators would promote the credence and trust of investors in the industry. In addition, he said the approach would help to ward off fraudulent and malicious actors from the crypto space.
Behnam Says It Difficult To Regulate The Crypto Industry
The CFTV chairman admitted during the interview that there is some striking resemblance between traditional financial assets and digital financial assets. However, there are some obvious and crucial differences between the duo, which require a special regulatory strategy.
Nonetheless, Behnam pointed out that it is still challenging to classify digital assets as commodities or securities. For instance, he highlighted that initially, at their launching stage, some tokens pool capital from investors to kick off. This makes it look like a typical security token.
However, after launching, the token becomes more decentralized, suddenly flipping status from security to commodity token. Behnam’s comments depict the broader difficulties the authorities face while regulating the crypto industry.
According to Behnam, crypto provides numerous opportunities for economic and innovation growth. However, it also introduces new risks and tasks for the regulators to solve.
In addition, the CFTC highlighted in his comments that authorities could promote and encourage innovations, protect investors, and maintain market stability if they recognize and adopt a regulatory approach based on subtle and thoughtful principles.
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