In light of recent legal actions taken by the Securities and Exchange Commission (SEC) against major cryptocurrency exchanges Binance and Coinbase, the House Agriculture Committee held a hearing to discuss the regulation of cryptocurrency spot markets.
Following the SEC’s lawsuits against Binance and Coinbase, the U.S. House Agriculture Committee convened a hearing with two panels on June 6 to address the regulation of cryptocurrency spot markets.
The first panel featured Rostin Behnam, Chair of the Commodity Futures Trading Commission (CFTC), who answered lawmakers’ questions. The second panel consisted of professionals from the cryptocurrency industry and former CFTC executives.
During his session, Behnam focused on the need for clear categorization of cryptocurrency tokens, the current enforcement practices, and the necessity of well-defined regulatory guidelines.
In the preceding week, the SEC classified twelve tokens as securities in their legal cases against Binance and Coinbase. Representative Dusty Johnson from South Dakota questioned whether the SEC should have exclusive authority over digital assets.
Behnam responded by stating that the issue was not an either/or scenario. He emphasized that any regulatory power given to the CFTC would not undermine other parties. Behnam also highlighted the regulatory gap concerning digital commodity assets.
Regarding the SEC’s jurisdiction, Behnam argued that the SEC should regulate assets classified as securities. He further emphasized that Bitcoin, the largest cryptocurrency, is considered a commodity by U.S. courts and remains unregulated under U.S. law.
Behnam urgently called for expanded authority for the regulatory body over the cryptocurrency commodity sector, noting that there are few exchanges that list assets formally identified as commodities.
Several lawmakers expressed concerns about the current regulatory approach in the United States, which heavily relies on enforcement. Committee Chair Glenn Thompson, a Republican from Pennsylvania, stated that regulation through enforcement fails to adequately protect customers, promote market stability, or foster innovation.
When Representative Jim Govern, a Democrat from Massachusetts, asked about the potential consequences of this regulatory approach, Behnam pointed out the CFTC’s enforcement record, including 82 cases over eight years without regulatory authority.
Behnam argued that the issue is not the CFTC or SEC taking legal action against entities that violate the law but rather the need for enhanced congressional authority to manage risks associated with cryptocurrencies and establish clear regulations.
Warning of potential financial instability, Behnam stated that if the cryptocurrency market continues to grow, it could pose significant concerns for financial stability.
This committee hearing took place shortly after the SEC filed charges against Coinbase for alleged violations of securities laws. The charges against Binance, the world’s largest cryptocurrency exchange, were announced a day prior.
The second panel of the hearing included notable figures such as Paul Grewal, Chief Legal Officer of Coinbase, and Dan Gallagher, Chief Legal Compliance and Corporate Affairs Officer of Robinhood, as well as former chairs and commissioners of the CFTC.