Signage is seen outside of CFTC in Washington, D.C.
Signage is seen outside of CFTC in Washington, D.C. Reuters

KEY POINTS

  • Behnam said some of the new crypto-related enforcement actions may come between six and 24 months from now
  • He reiterated that regulations were necessary to stop the "fraud and manipulation" in the crypto industry
  • The CFTC has brought over a hundred enforcement actions against crypto firms, the latest being KuCoin

The chair of the U.S. Commodity Futures Trading Commission (CFTC) has just dropped a bomb on the cryptocurrency market, saying there will be new enforcement actions on the industry within the next two years.

Speaking at the Milken Institute's 27th annual Global Conference Monday, CFTC chair Rostin Behnam first acknowledged that the digital assets industry is a "growing market" and entrepreneurs have shown a "renewed interest" in what cryptocurrencies can do.

"From my standpoint as a regulator, we're going to probably see in the next six to 18 months or six to 24 months another cycle of enforcement actions because of this cycle of this asset appreciation and interest by retail investors, and without a regulatory framework, without that transparency, without those tools that we typically use as regulators, you're going to continue to see this fraud and manipulation [in the crypto sector]," he said.

He went on to note that regarding the possible effects of digital assets on the greater financial markets, regulators need to view the emerging products "from a regulatory and consumer protection standpoint" as he believes such an approach is the "guiding light in terms of driving this conversation."

His statements came following a string of enforcement actions both the CFTC and the Securities and Exchange Commission (SEC) brought upon some of the crypto industry's largest players including crypto exchange titan Binance and popular digital assets exchange KuCoin.

Late in November, the CFTC said it had initiated 134 enforcement actions "against actors in the digital market economy," with majority of the cases related to alleged fraud and misconduct.

The latest action by the CFTC, which is a separate agency from the SEC and oversees the derivatives market with a specific focus on swaps, options and futures contracts, was brought upon KuCoin. The regulator accused the operators of KuCoin of violating multiple CFTC regulations and the Commodity Exchange Act.

The derivatives regulator said the crypto exchange "illegally dealt in off-exchange commodity futures transactions and leveraged, margined, or financed retail commodity transactions," among other violations.

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