Urgent Warning: Crypto Market Vulnerable Without CFTC Authority, Says Ex-Chair Behnam

The cryptocurrency market faces significant risks, including fraud and manipulation, unless regulators are given clear authority. That’s the stark warning from former Commodity Futures Trading Commission (CFTC) Chair Rostin Behnam. His comments highlight the urgent need for comprehensive crypto regulation to protect investors and ensure market integrity.

Why CFTC Authority is Essential for Digital Assets

Rostin Behnam, who led the CFTC under President Joe Biden, recently stated that the crypto market will remain largely unregulated unless his former agency receives expanded authority. Speaking in a Bloomberg TV interview on May 28, Behnam echoed a common view within the crypto industry: many major cryptocurrencies are commodities.

He specifically mentioned Bitcoin and Ether as examples of tokens that, under existing law, fall outside the jurisdiction of the Securities and Exchange Commission (SEC). The core issue, according to Behnam, is a regulatory gap:

• The SEC regulates securities, but major tokens are considered commodities.
• The CFTC regulates derivatives markets, not the underlying cash markets for commodities.

This means that without new legislation granting the CFTC explicit authority over “cash markets in digital assets, non-securities,” this crucial part of the crypto market remains in a regulatory gray zone.

Understanding the Regulatory Gap: SEC Jurisdiction vs. CFTC

The long-standing debate over whether specific cryptocurrencies are securities or commodities is central to the current regulatory challenge. The SEC, led by Chair Gary Gensler, has taken the stance that many tokens, beyond Bitcoin, are unregistered securities, bringing them under SEC oversight.

However, as Behnam points out, if assets like Bitcoin and Ether are indeed commodities, the SEC’s existing legal framework doesn’t allow it to regulate their spot markets. Conversely, while the CFTC has authority over crypto derivatives (like Bitcoin futures), it lacks direct regulatory power over the spot markets where these commodities are bought and sold outright.

This jurisdictional ambiguity creates a loophole, leaving investors and the broader crypto market exposed.

Crypto Market Vulnerability: The Risks of Being Unregulated

Behnam’s primary concern is the increased vulnerability of market participants in an unregulated environment. He warned that without proper oversight, customers, investors (both retail and institutional), will be more susceptible to:

• Harm
• Fraud
• Manipulation
• Conflicts of interest

He emphasized that “Ultimately, until we do something, the market will remain unregulated. Customers, investors, retail and institutional, will be more vulnerable to harm, fraud, manipulation and conflicts of interest, until the market is regulated.”

Regulation is Critical, Says Rostin Behnam, Amid Political Debate

Behnam’s comments come at a time of increasing political attention on cryptocurrency, including scrutiny of potential conflicts of interest related to political figures and their families’ involvement in crypto ventures. He also weighed in on recent remarks by Vice President JD Vance, who spoke at the Bitcoin 2025 conference, stating, “we reject regulators.”

Behnam offered a contrasting view, strongly defending the role of regulatory bodies. “Regulators are extremely important,” he stated, attributing the strength and desirability of American financial markets to their regulatory framework. He added that “Consumer protections and enforcement of the law are extremely critical to the health of our financial markets.” This perspective underscores the view that effective crypto regulation is not an obstacle to market growth, but a necessary foundation for its long-term health and legitimacy.

Conclusion: The Path Forward for Crypto Regulation

The message from former CFTC Chair Rostin Behnam is clear: the current lack of comprehensive crypto regulation, particularly over commodity-like digital assets, leaves the market and its participants dangerously vulnerable. Bridging the gap between SEC jurisdiction and the CFTC’s current limitations requires legislative action to grant the necessary CFTC authority. Until then, the risks of fraud, manipulation, and harm in the crypto market persist, highlighting the urgent need for policymakers to act decisively to establish a clear and effective regulatory framework.