Behnam noted that US regulators, including the CFTC, still lack the authority and tools to effectively prevent another significant crash in the cryptocurrency market. He emphasized that the CFTC’s jurisdiction over markets that facilitate trading of assets such as Bitcoin is limited. This restriction limits the CFTC’s ability to monitor company registrations and closely monitor their activities in the cryptocurrency sector. In addition, Behnam emphasized that only securities markets fall under the scope of regulation by the Securities and Exchange Commission (SEC), leaving a significant gap in oversight of the broader digital asset market.
Despite the decline in enthusiasm for cryptocurrency investing compared to the period leading up to the FTX collapse, Behnam warned: “We may find ourselves in a situation where another FTX-type event occurs.” He stressed that the market environment has changed significantly since last year, but fundamental regulatory issues remain unresolved. Behnam stressed the urgent need for a clear and effective regulatory framework for digital currencies. Repeating his previous statements at the Senate banking hearing, he reiterated the CFTC’s limited ability to fully regulate the digital goods market. He emphasized that without appropriate legislative authority, the CFTC and other regulators are limited in their ability to proactively manage the risks associated with the cryptocurrency market.
The CFTC Chairman’s remarks underscore the critical challenge facing lawmakers and regulators: finding the right balance between protecting investors and market integrity while encouraging innovation in the rapidly evolving digital currency space. This balance is necessary for the future stability and growth of the cryptocurrency market, and Behnam calls for a solution to be found as soon as possible.
Meanwhile, Bitcoin is experiencing a sharp rise in price, approaching $38,000, a level not seen since May 2022. This rally is driven by expectations of increased demand for cryptocurrencies from exchange-traded funds (ETFs). Over the past 24 hours, the largest digital asset rose 6.5% to $37,976. Its annual growth is an impressive 129% after a decline in 2022. Other virtual currencies, including Ether, also increased in value.
While the US Securities and Exchange Commission (SEC) has once again delayed a decision on whether to approve the first ETF that invests directly in Bitcoin, Bloomberg Intelligence predicts that a batch of such funds will get the green light by January. These ETFs will provide easier access to Bitcoin for institutional and retail investors. In addition, the belief that the Federal Reserve has paused raising interest rates has contributed to the rise in prices of cryptocurrencies. Cryptocurrencies are often affected by changes in liquidity levels in financial markets. Investors are now considering whether Bitcoin’s price rise this year has affected the potential impact of spot ETFs. While approval may already be priced in, the focus remains on how much inflow these ETFs will attract.
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