CFTC chair reiterates calls for crypto legislation, talks about growth of AI

Rostin Behnam, chair of the Commodity Futures Trading Commission, March 6 reiterated his call to pass legislation giving the CFTC authority over the digital commodity market and said the agency is working to understand the benefits and risks of artificial intelligence.

"In fiscal year 2023, which ended in October of 2023, we brought 47 actions involving conduct related to digital commodities, representing more than 49% of all CFTC actions filed," Behnam said before the House Agriculture Committee. "A staggering statistic given the fact that no federal agency retains any direct regulatory authority over the underlying or cash digital commodity market."

In July, the House Agriculture Committee and House Financial Services Committee advanced a bill that would provide the CFTC with jurisdiction over digital commodity markets, while also maintaining the SEC's authority over digital securities. The bill requires the agencies to create joint rulemakings on the issue and allows digital asset intermediaries to dually register with the SEC and CFTC.

Behnam contended that calls for digital asset legislation are not aimed at affirming the value of digital assets, which has been a contentious issue within Congress.

"This is not about legitimizing the technology," Behnam said. "This is about protecting Americans and protecting investors. Whether or not they want to invest in it in the future is their choice, but the fact of the matter is the technology's here, and we need to protect investors and protect the American economy."

SEC Chair Gary Gensler has repeatedly said most digital assets are securities under the Howey Test, which the SEC uses to determine which transactions qualify as "investment contracts." But Gensler has said that he considers bitcoin to be a commodity, and he also said he supports the CFTC gaining more authority over the digital commodity market.

Separately, Behnam told lawmakers about the CFTC's efforts to learn more about how financial institutions are using AI.

In January, the CFTC issued a request for comment on the use of AI in the derivatives markets it regulates.

"This is, in my mind, a deliberate, intentional way of seeking feedback from the market, from academics, from public interest groups, to see how AI is being used in the marketplace right now, and how it may be used in the future, and that's both risks and benefits," Behnam said, adding that the agency is in the "fact finding stage right now."

While the CFTC is still early in this process, Behnam noted that larger entities are currently using AI and the scope of its use may expand in the future.

"We are aware through really anecdotal conversations that artificial intelligence is being used by some of the more sophisticated, well-resourced entities, but we also know that it's growing, and it's going to grow beyond these larger financial institutions," he said.