U.S. Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam expressed concerns about spot Bitcoin (BTC) ETFs and called for new legislation in a speech at an American Bar Association event on Friday.
Behnam's comments come two weeks after the U.S. Securities and Exchange Commission (SEC) approved the first batch of spot BTC ETFs, which have so far seen billions of dollars in trading activity.
“The SEC's approval of long-awaited applications to list and trade shares of spot Bitcoin ETFs was seen by many as a natural next step in developing markets for digital assets,” Behnam said. Behnam argued that institutions, products, and processes that prove valuable to a sufficient number of producers, consumers, investors, and the public will inevitably become integrated into established regulatory systems.
Behnam also touched on the obstacles to regulating this emerging market, which he believes is built on fear of delegitimization. “I believe the legitimacy argument distracts us from our path. As the SEC's Jan. 10 decision proves, legislation is not a precursor to legitimacy,” he said.
He noted that no federal regulator has been given authority by Congress over cash markets for digital assets. Even for regulated products like Bitcoin futures, their legitimacy is based on demand generated by market participants, not self-certification.
“The lack of legislation has not hindered enthusiasm for digital assets,” Behnam said. He called on those fighting for the disappearance of digital assets in the absence of legislation to pause and understand where they find themselves.
Behnam expressed concern that regulatory approval of Bitcoin ETFs risks confusing both individual and institutional market investors with technical approval of a product with actual regulatory oversight approval of cash commodity digital assets. “The concerns I have been expressing publicly for six years regarding the digital asset commodity spot market have only increased,” he said.
Behnam concluded by emphasizing the need for federal regulation on cash market digital assets and stating that this has never been more critical.
*This is not investment advice.