Rostin Benham, Chairperson of the Commodity Futures and Trading Commission, has raised concerns about the Spot Bitcoin ETF, which the SEC recently approved, and demands new legislation to regulate crypto markets.
The need for new legislation was raised and felt just two weeks after the Securities and Exchange Commission approved the first set of spot ETFs on Bitcoin as an underlying, which led to transactions of billions of dollars, resulting in inflows and outflows from various BTC ETFs.
Benham said that the cash market for digital assets has become more critical than ever with the approval of spot Bitcoin ETFs. He shared a speech on January 26 discussing upcoming concerns related to the spot ETF.
Highlighting the lack of transparency and opaqueness in the structure, he stated, “There remains nothing firmly in place to address the opaque and inconsistent practices in the cash markets for digital assets.”
Concerns Flagged by CFTC Chair, Rostin Benham
The American Bar Association organized an event where he spoke about the increasing concerns and the ETF approvals that have raised numerous risks in the system. These risks have raised the need for new regulations at the federal level.
He presented his views, stating, “I fear that the regulatory approval of bitcoin ETPs introduces risk that, in spite of yellow flags, market participants, retail and institutional alike, may mistake the technical approval of a product—with actual regulatory oversight of the cash commodity digital assets.”
Benham further said that Congress has granted no controlling or regulatory authority to control cash markets for digital assets. He states that this is one of the major risks, and he further asks Congress to draft new regulations to control crypto.
The lawmakers have formulated and presented various bills in the last few years. The bills were aimed at providing the CFTC with advanced authority over cash markets. However, the new bills are not yet capable of building the desired support.
Red Flags are Outsized with Spot ETF
Rostin Benham has been pointing towards the growth of greater digital asset commodity spot market regulation for the last six years. He believes that regulatory implementation in the digital asset markets would act as safety measures against conflicts of interest and customer protection. However, the approval of ETFs has elaborated his fears as he stated,
“The concerns I have publicly voiced for the better part of six years regarding the digital asset commodity spot market have only become magnified. The need for federal legislation over cash market digital assets has never been more critical, and I will continue my call for action. There is nothing firmly in place to “address the opaque and inconsistent practices in the cash markets for digital assets” around issues like conflicts of interest and customer protection. Instead, the ETPs have taken a speculative and volatile asset, wrapped it in a thin layer of indirect regulation, and packaged it as a shiny new product.”
Towards the end of the speech, he also appreciated that the CFTC has been the premier enforcement agency in the space of digital assets. The CFTC has brought all the major frauds in the industry to the public eye and also empowered the introduction of most of the new altcoins.