The US lawmakers will reportedly discuss FTX’s collapse with Rostin Behnam – Chairman of the Commodity Futures Trading Commission (CFTC).
The authorities will examine whether the regulator could have done something to avoid the crisis.
Behnam in the Hot Seat
According to a Reuters coverage, the committee that oversees the CFTC will host a hearing called “Lessons Learned From the FTX Collapse, and the Need for Congressional Action.” The agency will question Rostin Behnam regarding the gigantic crash of FTX and whether the watchdog could have prevented it.
The committee could also ask about the purpose of the “many meetings” between the CFTC and some of FTX’s staff, including its former CEO – Sam Bankman-Fried.
Behnam previously revealed that both sides met frequently to discuss the exchange’s application to “directly clear customer trades.” Such plans were pulled once FTX filed for Chapter 11 bankruptcy protection.
“There are elements of the application that I think have merit, but ultimately we didn’t come up with a decision. We were actually not even close because there were more questions,” he said.
The Chairman insisted he has urged the American lawmakers to grant more authority to the CFTC to impose rules on the sector. In his view, though, tougher regulations might not have prevented the meltdown of FTX.
There is a bit of confusion about which US watchdog should primarily monitor the cryptocurrency industry. The CFTC is responsible for derivatives markets and is allowed to halt fraudulent schemes. However, it is not accountable for spot markets.
The US SEC, on the other hand, has more authority to crack down on cases involving individual investors. Its Chairman – Gary Gensler – recently classified most cryptocurrencies as securities, meaning they should fall under his agency’s jurisdiction. The CFTC should have “direct regulatory authorities over the underlying non-security tokens,” he opined.
Dispute Between the Regulators
The Chairman of the CFTC shares an opposite stance than Gensler, viewing bitcoin and ether as commodities or in the same category as oil, natural gas, and precious metals.
“I’ve suggested [ether] is a commodity, and Chair Gensler thinks otherwise,” Behnam said in October.
The SEC’s Chairman previously stated that Ethereum’s transition from a Proof-of-Work consensus mechanism to Proof-of-Stake, known as the Merge, might turn the native token of the protocol – ether – into a security.
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