Futures and Derivatives Law Report May 2022 | Volume 42 | Issue 5
The Commission ’ s broadest authority in such an instance resides in the power to investigate in order to implement and enforce the CEA and Commission regulations . 17
To date , the Division of Enforcement has been active in using this enforcement authority , pursuing over 20 enforcement actions involving digital asset allegations in FY 2021 . 18
Chairman Behnam ’ s regulatory approach to digital assets will be guided by the Biden Administration ’ s Executive Order on Ensuring Responsible Development of Digital Assets , released on March 9 , 2022 (“ March Executive Order ”). 19 The March Executive Order is the Administration ’ s policy statement on digital assets and blockchain technology . It tasks the CFTC with collaborating with other market , consumer , and banking regulators to report on the financial stability risks posed by digital assets , the implications for financial markets and payment systems of wide-spread adoption of digital assets , and the sufficiency of current regulations to protect customers and investors . The March Executive Order also requests that the agencies make recommendations for additional regulations and legislation to fill any regulatory gaps and to further ensure the protection of customers and investors .
In working with other regulators to identify and formulate a regulatory framework applicable to digital assets , Chairman Behnam likely will advocate for legislation that will grant special authority to the CFTC to regulate digital assets that are commodities . The Chairman has pushed for such legislation in hearings before the Congressional committees that oversee the CFTC . 20 He reiterated this point in a recent speech in which he declared , “ I will continue advocating for and supporting legislative authority for the
CFTC to develop a regulatory framework for the cash digital asset commodity market .” 21 This would be an extraordinary change for the agency , which traditionally only covers derivatives markets for commodities , not the underlying cash market . Ranking Member Glenn “ G . T .” Thompson of the House Agriculture Committee has released a draft bill that would grant this extension of power to the CFTC . 22 Although this legislation seems to have bipartisan support in both houses , it likely will stay on hold until the CFTC and its sister agencies complete the reports requested in the March Executive Order .
While he pursues a regulatory solution to digital assets , Chairman Behnam also believes that any approach will be rooted in “ proactive ” enforcement . 23 Chairman Behnam has stated :
I maintain that we should be reasonable but firm , and let enforcement guide us , but not always take the lead . . . . What we are seeing now appears to be rooted in a lack of risk management or the absence of a structured compliance function . It may be that we need to assert our authority and regulatory oversight , tempered by the need to be clear in the boundaries of our authority , but firm enough to incite a culture of compliance . 24
These statements , and the numerous enforcement actions brought by the agency in recent years , all point to a continued aggressive approach by the Division of Enforcement in pursuing investigations and enforcement actions against entities and individuals involved in digital assets .
2 . CLIMATE CHANGE AND ENERGY MARKETS
From his days as a Commissioner to his Senate nomination hearing to recent industry speeches , Chairman Behnam has made address-
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