By
Chimamanda U. Martha
April 23rd, 2024
The CFTC decided that they could eventually make tweaks to the idea proposed by FTX based on the internal review and the external input of the agency.
In a recent conventional hearing with the House Agriculture Committee titled, “The State of the CFTC,” the chairman of the Commodity Futures Trading Commission (CFTC) was seen making assertions on the possible outcome of a proposal made by cryptocurrency exchange FTX.
The debate was initiated by David Scott, the chairman of the committee who claimed to be very concerned about FTX’s demand for an approval to operate a new and untested system of clearing derivative trades without the intermediation of futures commission merchants.
Scott had encouraged the committee to cautiously, deliberately and patiently examine the proposal while making considerations regarding it as he believes that it needs far more review and careful oversight.
In contrast, Rostin Behnam, the CFTC chairman. believes there’s a need for an expansion of CFTC’s work with crypto as this could lead to a massive boost in resources. In response to Scott, Behnam expressed a contrary opinion saying:
“Despite the novelty, as chairman, I feel I have the responsibility to give every stakeholder and every market participant an opportunity to share their views and to present their ideas that they have to the market.”
“In many respects, this proposal could be a turning point or an inflection point for market structure. I don’t know that. I don’t believe that right now, necessarily, but I do think I have to consider the proposal in case there is a possibility for a new market structure that could provide innovation, provide more efficient markets, better pricing, better hedging tools,” he added.
After several deliberations and assertions, the CFTC decided that they could eventually make tweaks to the idea proposed by FTX based on the internal review and the external input of the agency. Afterward, the company would be left to decide whether it can live with the changes poised to come out of the decision.
Behnam in his firm belief of the possible positive impact of the firm’s proposal claimed he doubted an FTX approval would require changes to existing commodities rules.
However, the agency chief continued to argue that it’s increasingly important for this “largely unregulated market” to put a definition to what makes a digital commodity, noting that CFTC should be responsible for the definition.