The recent approval of Bitcoin exchange-traded funds (ETFs) could be mistaken as comprehensive crypto regulation according to Rostin Behnam, chair of the Commodity Futures Trading Commission (CFTC).
In a keynote speech, Behnam said greenlighting Bitcoin ETFs may lead investors to believe there is now regulatory supervision over cryptocurrencies. However, he argued there remains limited oversight for digital asset cash markets like crypto exchanges.
While Bitcoin ETFs allow indirect crypto exposure under SEC regulation, Behnam said the cash markets where ETF providers obtain the actual BTC lack transparency and consistency. He raised concerns around settlement, conflicts, data reporting, cybersecurity, and overall integrity.
“The ETFs have taken a speculative asset, wrapped it in thin regulation, and packaged it as a shiny new product,” said Behnam.
The CFTC chair’s comments come as the crypto industry continues pushing for clear regulations amid growing adoption. Some officials have proposed limited pilot programs to explore oversight frameworks.
Many expect regulatory clarity after the 2024 presidential election, as most candidates’ crypto positions will be important to voters. For now, Behnam urges caution in assuming Bitcoin ETF approval equates to comprehensive oversight.
While a milestone for crypto, Bitcoin ETFs do not address broader regulatory gaps like exchange practices. Behnam worries misinterpreting their approval as full oversight could expose investors and compromise market integrity. For now, the cash markets underpinning even regulated crypto products need more transparency.
