“If Congress decides that our jurisdiction should be expanded to include the cash market in some way, we’ll need a lot more resources to accomplish it,” Berkovitz says.
Berkovitz said the Commodity Futures Trading Commission or CFTC, enforcement efforts in the crypto industry have been “tough,” citing a $100 million civil monetary penalty against derivatives exchange BitMEX, during the Managed Funds Association Digital Assets Conference on Tuesday.
While the US Commodity Futures Trading Commission is well-suited to futures contracts, swaps, and options trading, it would require more resources to handle the cash market for crypto assets, according to Dan Berkovitz, one of three commissioners now serving on the commission.
Despite having the “capability and expertise” to further regulate crypto assets, he stated that the agency was now unable to do so owing to a “resource issue.”
“If Congress decides that our jurisdiction should be expanded to include the cash market in some way, we’ll need a lot more resources to accomplish it,” Berkovitz says.
“We’re not necessarily asking for additional authority in cryptocurrency markets without more resources. We’ll keep in our own lane.”
The agency, the Securities and Exchange Commission, the Financial Crimes Enforcement Network, the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Department of the Treasury all worked together, according to Berkovitz.
The CFTC collaborated with the Financial Crimes Enforcement Network to resolve the lawsuit against BitMEX, and the SEC is investigating cryptocurrency trading apps.
“We’re all pretty comfortable with the lanes that we go down,” Berkovitz added, referring to the agencies’ different jurisdictions. “I think the coordination is fantastic.”
In addition, the CFTC commissioner reaffirmed his June statement that decentralized financial platforms were likely prohibited under the Commodity Exchange Act.
According to Berkovitz, projects in the DeFi space have a “spectrum of centralization” that may render them vulnerable to CFTC registration.
The CFTC usually has five commissioners, but it has been rattled by the departures of previous head Heath Tarbert in January and Brian Quintenz on Aug. 31.
Berkovitz has also indicated that he will step down from the commission on Oct. 15, leaving only Rostin Behnam and Dawn Stump as acting chair and vice-chair, respectively.
President Joe Biden announced earlier this month that he planned to propose Behnam for a permanent position and fill the remaining seats with law professor Kristin Johnson and former SEC enforcement division senior counsel Christy Goldsmith Romero.
All must be confirmed by the Democratic-controlled Senate, but the White House has yet to name a possible Berkovitz replacement.
