CFTC looks at expanded authority to regulate crypto, for less than a 10% budget increase
The U.S. Commodity Futures Trading Commission, or CFTC, has released its Fiscal Year 2023 (FY2023) budget request, seeking $365 million. This marks a 9.9% increase over the previous year and 20% over FY2021. The commission regulates the country’s derivatives market and has been increasingly active in recent years in policing financial products that incorporate cryptocurrencies.
According to the agency’s request document, the CFTC focuses on digital asset custodian risk, ensuring secure storage, as well as on accounting. The agency has its own staff of certified public accountants due to the lack of guidance on digital asset accounting from sectoral oversight bodies. In addition, the agency ensures derivative clearing organizations “employ strong segregation of duty processes and procedures to safeguard against theft of the collateral from [their] employees,” and it has extensive plans to increase educational efforts.
The request was more modest than what commissioner Rostin Behnam had been angling for. He told the Senate Agriculture Committee in February that his agency needed an additional $100 million and additional authority to regulate Bitcoin (BTC) and Ethereum (ETH), the cryptocurrencies the government treats as commodities.
The CFTC now depends heavily on whistleblowers in its enforcement efforts. Behnam told a Futures Industry Association audience this month that the agency had received over 600 tips since October, of which “a large number allege cryptocurrency fraud, such as pump-and-dump schemes, refusals to honor requests to withdraw money, and romance scams.” The agency announced a $10 million whistleblower award on March 18.
It seems likely the agency will receive more authority in the arena of digital assets. Senators Cynthia Lummis and Kristen Gillibrand have indicated that their bill on cryptocurrency regulation, when it is introduced, will include a prominent role for the CFTC, and a recent Government Accountability Office (GAO) report commented on the agency’s limited authority.
The president’s FY2023 budget, announced Monday, foresees generating $11 billion in revenue over the next decade by modernizing therules relating to digital assets.