After the catastrophic collapse of FTX, which was once the biggest crypto exchange in the world and now is nothing, CFTC Chair believes that crypto is potentially a threat to National Security. On the 1st of December, Rostin Behnam, the chairman of CFTC Commodities Futures Trading Commission, said that cryptocurrency might be a threat to America’s national security and that more regulation is needed in space now.
On the 1st of December, in the first congressional oversight hearing on the collapse of FTX and its founder & ex-CEO Sam Bankman-Fried, Senators questioned CFTC Chair Rostin on the lack of regulation in space. FTX was the biggest crypto exchange, but when the revelation came to light that its leadership mismanaged it and its related entities and used customers’ funds to make risky bets on its related entities, FTX collapsed. FTX lost billions of dollars worth of customer assets, which led the exchange firm to bankruptcy.
In the hearing, when Senator Roger Wayne Marshall, who described the space as a nuclear bomb going off, asked about digital assets being used by criminals, Rostin responded that cryptocurrency was potentially a threat to national security. Rostin argued that even if the US government wanted to ban them from US soil, digital assets will exist. As only 2% of FTX customers were from its US subsidiary, and FTX exchange was a Bahamas-based company.
Rostin said that that’s not supposed to happen, folks will find a way to get exposure to offshore entities and activities, even if it’s banned in the US, and we have to do something about that. Addressing lawmakers, he said that his agency, CFTC, needs to able to have the power to write rules and oversee crypto trading, such as stopping exchanges from having affiliated companies that trade with clients on the platform.
Rostin said that they need registration of exchanges, surveillance of market activity, and direct relationships with custodians who are holding customer money. By getting all this, we can prohibit and prevent money moving around that does not house money, he added.