The Relationship Between Crypto and the US CFTC Could Be One-Sided
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The Commodity Futures Trading Commission (CFTC) oversees swap markets with a notional value of more than $400 trillion. Crypto’s $1.3 trillion market cap seems paltry in comparison.
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The CFTC increased its crypto cases from 20% in 2022 to 49% in 2023.
Half of the penalties in 2023 were against digital companies, according to the US Commodity Futures Trading Commission’s annual enforcement summary released on Tuesday assets and individuals.
The first section of the report states: “The CFTC has cemented its reputation as a leading enforcement agency in the digital assets space.” The U.S. derivatives regulator, which is responsible for fraud and manipulation in crypto markets, has 47 lawsuits against it in fiscal 2023 submitted to the crypto market. This represents only a small fraction of the total trading that the regulator oversees.
The CFTC listed a number of ongoing proceedings, including the prosecution of FTX (and former CEO Sam Bankman Fried), who was convicted but not yet sentenced in a criminal case related to his conviction; Binance founder Changpeng Zhao and the actions against Celsius and Alex Mashinsky.
The agency “won the first legal victory of its kind against a centralized autonomous organization” when a court ruled that Ooki DAO was a legitimate, unincorporated association and could be sued for violating the law.
CFTC Chairman Rostin Behram praised his enforcement division’s “groundbreaking work” in the digital assets space. This resulted in a large number of cases. He also praised staff for their commitment to holding registrants and participants in the CFTC regulated market accountable.
Behnam’s agency is often referred to as the US regulator of choice in the crypto space. Industry insiders said its approach to digital assets is more sensible than that of its sister agency, the Securities and Exchange Commission. Even though the CFTC may have fewer staff and fewer resources than the SEC, its enforcement priorities show that crypto is on its radar.
Cryptocurrencies were involved in 49% of CFTC cases last year, compared to 20% the year before.
Crypto lobbyists and crypto industry allies in Congress – typically Republican lawmakers – have pushed to give the CFTC more power. This includes a direct regulator of the cryptocurrency spot markets where crypto assets are traded. This could give the agency a dominant role in the crypto market compared to the SEC.
