Rostin Behnam’s parting ask for crypto rules

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We got another expected Biden-era cabinet member resignation today: CFTC Chair Rostin Behnam will step down from his position on Inauguration Day and leave the agency altogether in early February.

Behnam, a Democrat nominated to the commission by Donald Trump in 2017, became acting chair after President Joe Biden was inaugurated. He was later confirmed by the Senate in December 2021. 

Trump is expected to name either Caroline Pham or Summer Mersinger, both sitting Republican commissioners, as acting chair later this month. He may or may not opt to bring in a new candidate for Senate approval. 

Short-listed names to head the derivatives regulator include Jill Sommers of consultancy firm Potomak Global Partners and Milbank law partner Josh Sterling, according to Reuters. 

Former CFTC Commissioner and head of policy at a16z crypto Brian Quintenz is also being considered, a person familiar with the matter told Blockworks. Quintenz served on the commission from 2017 to 2021. 

The CFTC, long seen as a lesser player in the financial regulation landscape, took on a more important role in cryptocurrency regulation in recent years. Bipartisan efforts, including the FIT21 bill that passed through Congress last year, attempted to give the CFTC more oversight over crypto markets. 

Behnam himself advocated for more CFTC authority, particularly with regards to the fact that as it currently stands, the agency does not have explicit, comprehensive authority over crypto derivatives markets. 

“The evidence is in our enforcement record, and we even point to the SEC’s enforcement record as well,” Behnam said in 2023 during a Congressional hearing. “We brought 82 cases over about eight years, and [these] 82 cases [came from] an agency that doesn’t have regulatory authority.” 

That said, the CFTC was part of the 2023 settlement agreement with Binance, which resulted in a payment of more than $4 billion, one of the largest corporate penalties ever. 

“Binance’s activities undermined the foundation of safe and sound financial markets by intentionally avoiding basic, fundamental obligations that apply to exchanges, all the while collecting approximately $1.35 billion in trading fees from US customers,” Behnam said in a statement at the time of the settlement announcement. 

Pham and Mersinger — both known for their engagement with the crypto industry in recent years — have dissented from other commissioners regarding crypto enforcement actions. In September the two issued statements against the CFTC’s $175,000 settlement with Uniswap for an alleged illegal leveraged trading offering. 

Mersinger claimed that the case against Uniswap “has all the hallmarks of what we have come to know as regulation through enforcement.” 

Pham, in her opinion, noted that the agency seems to be treating crypto actors with a scrutiny they would never apply to other industries. 

“Applying the logic of the CFTC’s legal argument, it seems that any commercial transaction to purchase a cow, a bushel of oats or a barrel of oil that involves the word ‘financed’ and is delivered in 30 days is a violation of [commodities laws] and needs to be executed on a futures exchange,” Pham wrote. “I am skeptical that the CFTC would try to enforce these statutory provisions outside of DeFi.” 

The Trump transition team did not immediately respond to our request for comment on Behnam’s resignation.

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