CFTC commissioner: agency doesn’t have enforcement resources without Congress

CFTC commissioner: agency doesn’t have enforcement resources without Congress

Dan Berkovitz is one of three U.S. Commodity Futures Trading Commission commissioners. He said that while the agency can trade futures contracts, options, and swaps, it needs additional resources to deal with the crypto asset market.

Berkovitz, speaking at the Managed Funds Association Digital Assets Conference, said that the Commodity Futures Trading Commission (CFTC) enforcement actions in crypto space have been aggressive. He cited a $100 million civil monetary penality against BitMEX derivatives exchange. He stated that the agency had the “capability” and “expertise” to regulate crypto assets but was currently unable due to a “resource problem.”

Berkovitz stated, “If Congress were to decide that our jurisdiction should expand to regulate the cash market somehow, we would really require additional resources to do so.” “Cryptocurrency market, we are not necessarily looking to get more authority without having more resources. We are staying true to our path.”

Berkovitz pointed out that there was “a lot of cooperation” between the agency and the Securities and Exchange Commission and Financial Crimes Enforcement Network. Federal Reserve, Office of the Comptroller of the Currency and Department of the Treasury were also involved. To settle BitMEX’s case, the CFTC worked closely with the Financial Crimes Enforcement Network and coordinated with the SEC in order to investigate crypto trading apps.

Berkovitz said, “We all know the lanes we use,” referring to the jurisdictions of each agency. “I believe coordination is really excellent.”

In addition to his June comments that decentralized finance platforms are likely illegal under the Commodity Exchange Act, the CFTC commissioner doubled down. Berkovitz stated that there was a “spectrum” of centralization around DeFi projects, which could lead to them being subject to registration by the CFTC.

Related: CFTC renews: What Biden’s New Agency Picks for Crypto Regulation

The CFTC normally has five commissioners. However, the agency was shaken by the departures of Heath Tarbert (January) and Brian Quintenz (August 31). Berkovitz also stated that he will be leaving the commission on October 15, leaving only Rostin Behnam as acting chair and Dawn Stump as acting vice-chairs.

Joe Biden stated earlier this month that he would nominate Behnam as his permanent replacement. He also plans to fill the remaining seats with Kristin Johnson, former SEC enforcement division senior counsel Christy Goldsmith Romero. The confirmation of all must be done by the Democrat-controlled Senate. However, the White House has yet to announce a replacement for Berkovitz.

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