Rostin Behnam, Chairman of the Commodity Futures Trading Commission (CFTC) today testified regarding “Examining Digital Assets: Risks, Regulation, and Innovation”.

Mr Behnam stressed that digital assets impact more than just financial markets. He noted that reports regarding energy usage resulting from mining are staggering, often times being compared to that of entire countries.

Mr Behnam said:

“On this note, I believe any regulatory response to digital assets must include measures to bring additional transparency to the conduct that makes this innovation possible. Internally, I have directed the CFTC’s Climate Risk Unit and LabCFTC to examine the climate implications of digital assets. Staff have also begun initial communications with other federal agencies to ensure the knowledge and expertise of the whole federal complex is brought to bear on this challenge”.

Since 2014, the CFTC has been aggressive in using its limited fraud and manipulation authority in the digital asset space. The regulator has brought nearly 50 enforcement actions, overseen an increasing number of registrants offering digital asset based derivative products, and established dedicated internal functions to stay abreast of the technical innovations fueling this market.

However, many challenges remain, Mr Behnam said, and the digital sector now demands more and more of the CFTC’s attention and time.

The CFTC Chairman said the regulator is well situated to play an increasingly central role in overseeing the cash digital asset commodity market. Fundamentally, the CFTC is a market regulator that ensures market integrity and vibrancy aimed at supporting financial stability, while ensuring individual customer protections through principles-based oversight of exchanges, clearinghouses, data repositories, and market participants.

This flexible approach has allowed the CFTC, with authority from Congress, to evolve along with the derivatives markets from their historical roots in overseeing agricultural markets to now overseeing markets in everything from energy and precious metals to financial indices and swaps.

“And we now stand ready to do the same within the digital asset commodity market,” Mr Behnam concluded.