U.S. CFTC Commissioner: Without Congressional Approval, CFTC Has No Cryptocurrency Enforcement Resources

Dan Berkovitz, one of three commissioners currently serving at the U.S. Commodity Futures Trading Commission (CFTC), said that while the agency applies to futures contracts, swaps and options trading, it needs additional resources to handle spot crypto assets market.

Berkovitz told the Association of Managed Funds Digital Assets conference on Tuesday that the CFTC's enforcement actions in the crypto space have been "tough," citing the $100 million civil penalty imposed on derivatives exchange BitMEX as an example. While he said the agency has the "capacity and expertise" to further regulate crypto assets, it is currently unable to do so due to "resource issues."

Berkovitz said: "If Congress decides to expand our jurisdiction to allow us to regulate the spot market in a certain way, we do need additional resources to do that. In the cryptocurrency market, we will not necessarily do it without more resources. Seek more power under the circumstances. We will stay in our lane."

Berkovitz noted that "there is an ongoing process between the CFTC, SEC, FinCEN, Federal Reserve, OCC, FDIC and Treasury Department." Lots of coordination." The CFTC worked with FinCEN to resolve the case against BitMEX and with the SEC investigating the cryptocurrency trading app.

"We're all very familiar with the lanes we're on, and I think the coordination has actually been done really well," Berkovitz said, referring to the jurisdictions of the respective agencies.

The CFTC commissioner also further emphasized his comments made in June that decentralized financial platforms may be illegal under the U.S. Commodity Exchange Act. According to Berkovitz, there is a “centralized spectrum” around projects in the DeFi space, which may require them to register with the CFTC.

The CFTC normally has five commissioners, but the agency has been in turmoil since former Chairman Heath Tarbert and commissioner Brian Quintenz left in January and Aug. 31, respectively. Berkovitz also announced he plans to leave the committee on Oct. 15, leaving only acting chair Rostin Behnam and commissioner Dawn Stump.

Earlier this month, U.S. President Joe Biden said he planned to nominate Behnam for the long-term CFTC chairmanship, in addition to filling the remaining vacancies with law professor Kristin Johnson and former SEC enforcement division senior adviser Christy Goldsmith Romero. All candidates must be confirmed by the Senate, but the White House has not yet announced a possible replacement for Berkovitz.

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