The introduction of spot Bitcoin ETFs has led CFTC head Rostin Behnam to say that oversight of the digital asset cash market has “never been more critical.”
The recent approval of spot Bitcoin exchange-traded funds (ETFs) raises the possibility that the Commodity Futures Trading Commission (CFTC) chair, Rostin Behnam, may mistakenly believe that strict controls are in place for Bitcoin. as well as other cryptocurrencies generally.
Following the United States Securities and Exchange Commission’s (SEC) decision to approve 11 applications on January 10, Behnam emphasised in a keynote speech on January 26 that there is a chance that individual and institutional investors will misunderstand the legal verdict for spot Bitcoin ETFs.
He claimed that there is no regulatory monitoring for the cash market of digital assets, such as a cryptocurrency exchange, even if the approval now enables investors to be exposed to Bitcoin without actually holding the commodity itself, under the supervision of an SEC-regulated stock exchange.
“To address the opaque and inconsistent practices in the cash markets for digital assets, there is still nothing firmly in place.”
Behnam adds that as asset management companies buy the underlying assets for the ETF from the cash market, this has implications for the transparency of Bitcoin ETFs.
Concerns about trade settlement, conflicts of interest, data reporting, cybersecurity, consumer protection, openness, and overall market integrity were brought up by him.
“Thin-layer indirect regulation has been applied to a speculative and volatile asset by the ETPs, who have packaged it into a shiny new product,” Behnam said. The demand from the cryptocurrency business has made the enforcement of legislation pertaining to cryptocurrencies a hot topic of discussion within the U.S. government recently.
It was reported in September 2023 that Caroline Pham, Commissioner of the CFTC, supported a small-scale pilot programme to handle regulation of cryptocurrencies.
Pham issued a warning, saying that the US might have to “play catch-up” to countries that are welcoming to cryptocurrencies. She proposed that the programme would resemble state-level regulatory sandboxes that had been implemented in the past. But a lot of people in the cryptocurrency space believe that after November’s U.S. presidential election, there might be more regulatory certainty.
The majority of those who are interested in crypto said that a candidate’s stance on digital assets would be somewhat, very, or extremely crucial to their vote, according to a recent study conducted on January 2 by the Crypto Council for Innovation.