Bloomberg Law
Nov. 14, 2022, 6:11 PM

FTX Downfall Spurs CFTC’s Told-You-So Reminder on Crypto Rules

Katherine Doherty
Katherine Doherty
Bloomberg News
Isis Almeida
Isis Almeida
Bloomberg News

The collapse of Sam Bankman-Fried’s FTX crypto exchange adds urgency to a Washington push to transform the Commodity Futures Trading Commission into a top crypto watchdog, according to the head of the derivatives regulator.

CFTC Chairman Rostin Behnamsaid the implosion of FTX, whose swift and dramatic downfall culminated in a bankruptcy filing last week, is an example of why his agency needs more power to oversee cryptocurrency operations and trading.

“I’m hopeful that this will elevate the urgency for Congress to act to pass legislation that would give the CFTC more authority to regulate cash markets” and digital assets, the chairman said in an interview. “No question asked.”

Read More: Sam Bankman-Fried’s Magic Money Box Enriched Vast Crypto Network

Crypto executives have been pressing for the CFTC to get more power as they resist Securities and Exchange Commission Chair Gary Gensler’s assertions that many digital coins are securities under the SEC’s purview. Following FTX’s collapse, signs are growing that customers have little chance of recovering much of their deposits, with FTX Trading International holding just $900 million in liquid assets against $9 billion of liabilities as of late last week.

Knock-On effects

FTX’s unraveling -- which swiftly sparked chaos in the industry -- could have a knock-on effect on other financial institutions, though how far that pain could spread remains unknown, Behnam said at the Futures Industry Association conference in Chicago. So far, the crisis appears limited to investors and traders directly involved in FTX, he said earlier at the event.

Behnam has previously said his agency is poised to take on an expanded oversight role in crypto markets-- a shift that many in the industry say they would welcome. The CFTC’s jurisdiction over crypto is now largely limited to crypto futures.

Read More: Push to Give CFTC More Sway Over Crypto Trading Gains Steam

“We don’t have surveillance tools, market monitoring tools -- so we have to rely on either implosions or people coming to us and saying they are seeing fraud or manipulation in the marketplace,” Behnam said. “We’re going to continue to monitor the entities we can, and other than that, I will continue to advocate for new authority.”

FTX was due to sponsor the conference at the Sheraton Grand Chicago Riverwalk, which pulled together speakers from Cboe Global Markets Inc. and Coinbase Global Inc. But following its collapse late last week, FTX withdrew its sponsorship, leaving the conference organizers scrambling to remove their name from posters and banners last minute, according to a person familiar with the matter.

That didn’t go unnoticed. Jeff Sprecher, chief executive officer at Intercontinental Exchange, joked with the audience.

“You know FTX won’t be your big sponsor next year,” he told attendees in the audience. “So get your check books out.”

--With assistance from Ben Bain.

To contact the reporters on this story:
Katherine Doherty in New York at;
Isis Almeida in Chicago at

To contact the editors responsible for this story:
Sally Bakewell at

Steve Dickson

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