CFTC’s Behnam warns crypto industry that more enforcement actions are coming

A crypto bull market, coupled with the still-uncertain regulatory environment is going to create the perfect storm for increased enforcement actions, US Commodity Futures Trading Commission Chairman Rostin Behnam said.

“We find ourselves with a growing market, growing capital [and] investments, growing market capitalization, and I think a renewed interest by a lot of the entrepreneurs,” Behnam said Monday during a discussion at the Milken Institute’s Global Conference in Los Angeles.

“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.”

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Without action from Congress and increased regulatory transparency, Behnam added, agencies are going to lean more heavily on lawsuits.

“If you actually count the number of [Congressional] working days between now and the election…it’s really not that much time,” Behnam said when asked about the odds of any of the crypto-related bills making it to the floor for a vote in the House and Senate.

“Getting legislation done these days is difficult,” he added, but noted that there is “momentum” and “desire” from lawmakers to close some of the regulatory gaps around crypto, particularly with regards to stablecoin legislation.

Behnam’s comments come days after retail trading platform Robinhood announced it received a Wells notice from the US Securities and Exchange Commission. Securities regulators plan to proceed with an enforcement action relating to cryptocurrencies traded on the exchange, Robinhood said in a filing Saturday.

“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our US crypto business,” Dan Gallagher, Robinhood’s chief legal and compliance officer, said in a statement.

Last week, Consensys revealed it was also served a Wells notice from the SEC, in addition to a number of subpoenas relating to Ethereum. The SEC has not yet brought an enforcement action against Consensys, but the crypto firm is suing the exchange preemptively.

Behnam did not comment Monday on his agency’s relationship with the SEC with regards to crypto industry regulation, but Congressional leaders have been debating about how to address the so-called “turf war” between the agencies for over a year.

“When we have two agencies contradicting each other about whether one of the most utilized stablecoins in the market is a security or a commodity, we end up with uncertainty,” Rep. French Hill, R-Ark., who chairs the House Subcommittee on Digital Assets, said during an April 2023 hearing.

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