Sen. Durbin Raises Concerns About CFTC’s Oversight of Crypto Sector Post-FIT21
In a Senate Appropriations subcommittee hearing held on June 13, Senator Dick Durbin, D-Ill., questioned CFTC Chair Rostin Behnam and SEC Chair Gary Gensler regarding the effectiveness of CFTC’s regulatory capabilities in the crypto industry. The hearing also delved into broader concerns surrounding current regulatory frameworks and their impact on the growth and compliance of the crypto sector.
Durbin expressed doubts about the CFTC’s readiness to handle the increased responsibility granted by a recent bill passed in the US House, which aims to provide the agency with more power and funding to regulate cryptocurrency markets. During the hearing, Durbin directly asked Behnam about the agency’s ability to keep up with the rapidly evolving crypto sector.
Behnam acknowledged the challenges of expanding the CFTC’s regulatory scope and admitted that additional resources would be necessary to effectively oversee the crypto industry. Gensler, drawing from his experience as the former CFTC Chair, emphasized the differences between the agency’s current regulatory framework and what would be required to regulate crypto markets efficiently.
The recent passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) in the US House has further complicated the regulatory landscape. The bill assigns new jurisdiction to the CFTC over “digital commodities” while the SEC retains oversight over “digital assets offered as part of an investment contract.” Despite receiving bipartisan support, concerns have been raised about FIT21 potentially stretching the CFTC’s resources thin and weakening its enforcement capabilities, especially in comparison to the more staffed SEC.
During the hearing, Sen. Bill Hagerty, R-Tenn., criticized the SEC’s regulatory approach to cryptocurrencies, arguing that the lack of clear rules pushes the industry towards offshore markets. Gensler countered by suggesting that some crypto exchanges deliberately avoid compliance with US laws designed to protect capital markets.
